BOZ Cuts Interest Rate, Repricing Cycle Begins
The Bank of Zambia has reduced the Monetary Policy Rate (MPR) by 75 basis points, or 0.75%, from 14.25% to 13.5%.
This move is expected to gradually change interest rates across the financial system.
Borrowers with loans linked to the MPR or interbank rates may see lower repayments over time, easing pressure on businesses and households.
Savings accounts and fixed deposits may earn slightly less interest.
The cut also aims to support economic growth aspirations, stimulate private sector-led investments, and encourage borrowing appetite for productive sectors like agriculture, manufacturing and SMEs.
Financial markets will adjust gradually, with short-term Treasury yields responding first and longer-term bonds following depending on inflation trends and future policy expectation guidelines.
The movement will have a strong transmission channel to credit basket especially at the point of weak capital formation but it is very important to be very careful with running an expansionary policy given its an election year, as it can bleed non performing loans and inflation influence etc.
Overall, the decision is specifically designed to balance up growth, support price stability and currency resilience, while promoting a gradual, data-driven repricing across the financial system.
