Bank of Zambia Cuts Interest Rates to 14.25 Percent

The Bank of Zambia has reduced the Monetary Policy Rate by 25 basis points, from 14.5 percent to 14.25 percent.

The Governor of the Bank Dr. Denny Kalyalya attributed the reduction to the continued decline in inflation, which averaged 12.3% in the three quarters ending in September before falling further to 11.9% in October.

With the Bank's target inflation rate in the range of 6-8%, they expect to see progress toward more manageable inflation levels as the economy continues. In October, they predicted the figure would fall into the target range by the first quarter of next year.

Speaking at the fourth-quarter media briefing on the Monetary Policy Committee's statement for the third quarter of 2025, Dr. Kalyalya outlined the key drivers behind the inflation decline. He noted “the continued appreciation of the Kwacha against major currencies and the impact of the recent bumper maize harvest which has contributed to the lower prices of maize grain and maize meal.”

Lower inflation translates to reduced prices for everyday goods, meaning ordinary Zambians will see relief in the cost of food and fuel. Additionally, the lowering of interest rates makes borrowing cheaper, giving citizens more disposable income that can in turn stimulate economic growth.