Bank of Zambia Cuts Policy Rate to 13.5% as Inflation Falls Sharply
The Bank of Zambia has reduced its policy rate by 75 basis points to 13.5 percent following a marked decline in inflation and a positive outlook for the economy.
Governor Dr. Denny H. Kalyalya reported that inflation slowed to 9.4 percent in January 2026, down from 11.2 percent in December 2025 and 12.3 percent in September 2025. The fall has been attributed to a bumper maize harvest from the 2024/25 farming season and the appreciation of the Kwacha against major currencies.
Inflation is now projected to fall into the Bank’s 6–8 percent target band faster than previously forecast, reaching the band by the second quarter of 2026 and the lower bound by the second quarter of 2027.
The Bank anticipates average inflation of 6.9 percent in 2026, easing further to 6.3 percent in 2027. Downside risks to the inflation outlook include favourable weather, stable external conditions, higher copper prices, and continued macroeconomic stability.
“The recent sharp decline in inflation, combined with improving market expectations, supports the decision to lower the policy rate while maintaining a prudent monetary stance,” said Governor Dr. Kalyalya.
He added that future decisions will continue to be guided by inflation trends, forecasts, and financial stability considerations.
The February 2026 Monetary Policy Report, detailing recent economic developments and the inflation outlook, will be published on the Bank of Zambia website by the end of the month. The next Monetary Policy Committee meeting is scheduled for 11–12 May 2026.
The rate cut is expected to lower borrowing costs, stimulate economic activity, and support Zambia’s ongoing efforts to maintain price stability while fostering growth.
