Bank of Zambia Cuts Policy Rate as Inflation Declines

The Bank of Zambia has reduced the Monetary Policy Rate by 25 basis points to 14.25 percent, citing continued decline in inflation.

Speaking during a media briefing on Wednesday, BoZ Governor Dr Denny Kalyalya said the Monetary Policy Committee took into account that inflation has declined further in the third quarter, with projections indicating faster deceleration towards the lower bound of the six to eight percent target band.

Dr Kalyalya noted that inflation fell to 11.9 percent in October, inching towards the target band though still above it.

He attributed the decline to the continued appreciation of the Kwacha against major currencies and the impact of the recent bumper maize harvest, which has contributed to lower prices of maize grain and maize meal.

Inflation is forecast to average 7.6 percent in 2026 and move closer to the lower bound of the target band in 2027, averaging 6.6 percent over the first three quarters.

Dr Kalyalya revealed that Zambia's international reserves increased to $5.2 billion at the end of September, equivalent to 5.2 months of import cover, up from $4.7 billion in June.

The Kwacha appreciated by 3.1 percent against the US Dollar in the third quarter and gained a further 3.9 percent in October, mainly supported by increased foreign exchange supply from the mining sector.

The mining sector sold a net $440.5 million directly to the market in the third quarter.