Boz reduces Monetary Policy Rate in line with lower inflation

Bank of Zambia Governor, Dr Denny Kalyalya said the decision to reduce the Monetary Policy rate by 25 basis points to 13.25% was made at a committee meeting held on May 11 and May 12. The Monetary Policy Committee (MPC) reported a strong maize harvest during current crop marketing season and relative stability in the exchange rate of the Kwacha against the US dollar.

Dr Kalyalya added that the reduction of the Policy rate will have several positive effects on businesses and households as commercial banks may reduce interest rates on loans making borrowing more manageable for citizens.

However, the unpredictability of the Middle East conflict does pose a threat to the Policy Rate and has already resulted in in higher global crude oil prices. Dr Kalyalya also said that fuel prices could have been higher if not for the tax relief the Government has already provided.  

The Governor said inflation dropped from 11.2% in December to 7.1% in March, and then again to 6.8% in April falling safely withing the target bracket of 6-8%. This change was supported by base effects from lower maize and grain prices and the drastic appreciation of the Kwacha against the US dollar. The bank expects inflation to average at 6.8% in 2026 remaining within the target and anticipate it lowering further to 6.1% in 2027.