Bank of Zambia Cuts Policy Rate to 14.25% as Inflation Continues to Ease
The Bank of Zambia’s Monetary Policy Committee (MPC) has reduced the Monetary Policy Rate by 25 basis points to 14.25 percent following its meeting held on 10–11 November 2025. The Committee said the decision reflects continued progress in lowering inflation, though price pressures remain above the target range.
According to Bank of Zambia Governor, Dr Denny H. Kalyalya, inflation has been on a clear downward trend throughout the second half of 2025. Annual inflation dropped from 14.1 percent in June to 12.3 percent in September, before easing further to 11.9 percent in October. This deceleration has been largely supported by the appreciation of the Kwacha against the US dollar and the impact of a strong maize harvest, which helped reduce food prices.
However, the Bank has revised its inflation outlook for 2025 slightly upward to an annual average of 13.8 percent, up from an earlier projection of 13.3 percent in August, due to a slower than expected decline in food prices. Despite this adjustment, inflation is forecast to fall more sharply from the second half of 2026 onward.
“Inflation is expected to average 7.6 percent next year, compared to the earlier projection of 7.7 percent. By 2027, it is anticipated to move closer to the target, driven by the lagged effects of a stronger Kwacha, lower fuel costs, and reduced electricity tariffs for residential users,” Dr Kalyalya said.
The Bank also noted supportive conditions for further price stability, including favourable weather prospects for the ongoing farming season, improved export earnings from copper, subdued crude oil prices, and easing geopolitical tensions.
Despite progress, the MPC expressed caution, warning that inflation remains above desired levels and market expectations, though lower than before, have not yet stabilised. “Taking these factors into account, we adopted a cautious approach in reducing the Policy Rate,” Dr Kalyalya stated.
The Bank said upcoming rate decisions will be guided by inflation trends, forecasts, and risks, including those that may affect financial stability.
The November 2025 Monetary Policy Report, covering recent economic developments and detailed inflation projections, will be published on the Bank’s website before the end of the month. The next MPC meeting is scheduled for 9–10 February 2026.
