Zambia Lowers Key Policy Rate to 14.25%

The Central Bank of Zambia lowered its key policy rate by 75 basis points to 13.5% at its meeting on February 11, 2026, marking the second consecutive cut. The annual inflation slowed sharply to 9.4% in January 2026 from 11.2% in the previous month, driven by the bumper maize harvest from 2024/25 and the appreciation of the Kwacha against major currencies. Policymakers said inflation is expected to fall faster than previously forecast in November, with prices projected to enter the central bank’s 6%–8% target band by the second quarter of 2026 and reach the lower bound by mid-2027. The Bank of Zambia added that its policy stance will continue to be guided by inflation developments, forecasts, and identified risks, including those related to financial stability, while maintaining a position supportive of macroeconomic stability.

The Bank of Zambia reduced its key policy rate by 25 basis points to 14.25% at its regular meeting on November 12, 2025, implementing its first rate cut since August 2020. The move followed a continued moderation in inflation during the third quarter, as policymakers sought to ease monetary conditions while steering price growth back within the target range. Annual inflation eased to 11.9% in October, the lowest level in over two years, down from 12.3% in September. The central bank projected that inflationary pressures will keep moderating in the near term, with average price growth expected at 7.6% in 2026, slightly below the 7.7% forecast at the previous MPC meeting. Policymakers noted, however, that risks linked to external conditions and domestic supply factors remain.

The Central Bank of Zambia left its benchmark interest rate unchanged at 14.5% during its regular meeting on August 13th, 2025, marking the second consecutive hold. Policymakers noted that inflation has been trending downward since the last meeting but remains above the 6–8% target, while uncertainties around trade policies and ongoing geopolitical tensions persist. Zambia's annual inflation rate decelerated for the third month to 13% in July 2025, reaching the lowest level since November 2023. It is expected to continue its downward trend over the next eight quarters, reaching the target band by Q1 2026—earlier than May 2025 projections. The updated forecast sees inflation at 13.3% in 2025 and 7.7% in 2026, stable into mid-2027, reflecting exchange rate gains, lower commodity prices, and policy measures.