Lusaka, November 12, 2025.
The Bank of Zambia has reduced the Monetary Policy Rate by 25 basis points to 14.25%, signalling a cautiously optimistic outlook on inflation and economic stability. The decision was made during the Monetary Policy Committee (MPC) meeting held from November 10–11, 2025, and announced by Governor Dr. Denny Kalyalya at a press briefing at the central bank’s headquarters on November 12.
Inflation Showing Strong Signs of Deceleration
The MPC noted that inflation continued to decline through the third quarter, with projections indicating a faster deceleration towards the lower bound of the 6–8% target band over the forecast horizon (Q4 2025 – Q3 2027). However, inflation still remains above target, and market expectations are yet to adjust downward.
Inflation dropped to 12.3% in September from 14.1% in June, and further declined to 11.9% in October. The improvements were attributed to the continued appreciation of the Kwacha against major currencies and the impact of a bumper maize harvest, which helped ease the prices of maize grain and mealie meal.
Despite the progress, the Bank revised the 2025 inflation outlook slightly upwards to 13.8%, from the earlier projection of 13.3%, due to a slower-than-expected reduction in food prices. From mid-2026 to Q3 2027, however, inflation is expected to fall faster than previously anticipated.
Foreign Exchange Market Strengthened by Mining Sector
The mining sector remained the largest contributor of foreign exchange supply. In Q3, mining companies sold a net USD 440.5 million directly to the market, up from USD 418 million in Q2. About USD 196.3 million was remitted directly to the Bank of Zambia for tax obligations, compared to USD 262.1 million in the previous quarter.
To stabilize the Kwacha and support the importation of essential commodities, the Bank injected USD 120 million into the market. This intervention substantially reduced excess foreign exchange demand to USD 24 million, down from USD 156 million in Q2 2025.
Reserves Surge to USD 5.2 Billion
Gross international reserves increased to USD 5.2 billion at end-September, equivalent to 5.2 months of import cover, up from USD 4.7 billion (4.7 months of import cover) recorded at end-June. The rise was driven by multiple factors, including:
- The disbursement of USD 191.1 million under the IMF’s Extended Credit Facility (ECF)
- Project receipts
- Net statutory reserve deposits
- Bank of Zambia purchases
- Interest earnings on reserves
Policy Signals Going Forward
Dr. Kalyalya emphasized that future decisions on the Policy Rate will remain anchored on inflation outcomes, forecasts and identified risks including concerns related to financial sector stability.
The next Monetary Policy Committee meeting is scheduled for February 9–10, 2026.