Bank of Zambia Cuts Interest Rates to 10.75%

The Bank of Zambia lowered its monetary policy rate by 250 basis points to 10.75% on September 30. The reduction significantly exceeded economist predictions of a 25 basis point cut. The central bank based the decision on anchored inflation, noting that annual inflation dropped to 6.1% in September, marking the lowest level since 2018 and placing it near the bottom of the 6%-8% target range.

Governor Denny Kalyalya stated the rate cut aligns the monetary policy stance with the current inflation outlook. The central bank forecasts economic growth of 5.3% in 2026 and 6.0% in 2027.

Parallel to the rate adjustment, Zambia has entered discussions with an International Monetary Fund mission to establish a new support program. This follows the conclusion of a previous $1.7 billion arrangement that ended in January.