The Bank of Zambia cut its key Monetary Policy Rate by 25 basis points to 13.25% at its May 2026 meeting, bringing borrowing costs to their lowest level since mid‑2024. The decision was underpinned by expectations of a favourable maize harvest in the current crop marketing season and the relative stability of the kwacha against the US dollar, both of which are seen as supporting a more benign inflation outlook. These factors are expected to help keep inflation anchored within the central bank’s 6–8% target range.
At the same time, the central bank underscored persistent upside risks and elevated uncertainty stemming from the ongoing conflict in the Middle East. Against this backdrop, policymakers opted for a cautious pace of monetary easing in order to preserve an appropriate monetary policy stance.
Inflation is projected to remain within the target band, averaging 6.8% in 2026 and easing to 6.1% in 2027, before edging up to 6.6% in the first quarter of 2028. Zambia’s annual inflation rate slowed to 6.8% in April, its lowest level since February 2018.
