By Derrick Silimina

The Bank of Zambia has decreased the Monetary Policy Rate (MPR) to 14.25 percent, responding to the declining inflation rate which fell to 12.3 percent in September from 14.1 percent in June.

“Key drivers were the continued appreciation of the Kwacha against the US dollar and the impact of the recent bumper maize harvest, which has contributed to lower prices of maize grain and maize meal,” BoZ Governor Kalyalya said this during the Central Banks’ Monetary Policy Committee Press briefing held in Lusaka.

Dr. Kalyalya has indicated that the inflation outlook for 2025 has been revised upward to an average of 13.8 percent from the earlier projection of 13.3 percent made in August and has attributed the adjustment to the slower than anticipated decline in food prices.

He anticipated that the second half of 2026 to the end of the forecast horizon, inflation is forecast to decelerate faster than earlier projected in August and is forecast to average 7.6 percent in 2026 compared to 7.7 percent projected in August.

“In 2027, inflation is projected to move closer to the lower bound of the 6-8 percent target band, averaging 6.6 percent over the first threе quarters of the year adding that the main factors are lagged effects of the appreciation of the Kwacha against the US dollar, lower fuel prices, and downward adjustment in electricity tariffs for residential customers,” Dr. Kalyalya said.

The Central Bank Governor further stressed that risks to the inflation outlook are still assessed to be supportive of lower inflation including the favourable weather forecast for the current farming season, improved external sector conditions, reflected in higher copper export earnings and subdued crude oil prices, and the observed easing of geopolitical tensions.

“Taking all the above factors into account, the Committee adopted a cautious approach and decided to reduce the Policy Rate by 25 basis points to 14.25 percent.”