Bank of Zambia cuts interest rate to 10.75%

The Bank of Zambia has reduced its Monetary Policy Rate by 250 basis points to 10.75 percent, marking its fourth consecutive cut and its largest reduction in over a decade. The decision follows a decline in annual inflation, which fell to 6.1 percent in September from 6.2 percent in August, placing it within the central bank’s 6–8 percent target range.

Governor Denny Kalyalya stated that the move aims to align monetary policy with an improved economic outlook and support the national growth agenda. The easing of inflation has been driven by lower food prices—aided by a record maize harvest of 4.9 million tonnes—and a stronger Zambian kwacha, which appreciated by 8.3 percent during the third quarter due to increased foreign exchange from the mining sector.

While the rate cut provides potential relief for businesses and consumers regarding borrowing costs, policymakers face ongoing risks. The expiration of temporary measures, such as fuel tax suspensions and VAT zero-rating, could exert upward pressure on prices. The International Monetary Fund has advised Zambia to manage monetary policy carefully amid global uncertainty and rising fuel prices.