BOZ Maintains Policy Rate as Liquidity Pressures Keep Funding Costs Elevated

The Bank of Zambia (BOZ) has maintained the Monetary Policy Rate at 14.25%, signalling a continued commitment to controlling inflation despite persistent liquidity constraints in the financial system.

According to market data for 28 November 2025, interbank lending rates showed marginal easing throughout the day but remained high, reflecting tight conditions faced by commercial banks seeking short-term funds. The rates moved as follows:

• 09:30 – 14.28%
• 12:30 – 14.25%
• 15:30 – 14.23%

Despite this slight decline, the Overnight Lending Facility (OLF) the emergency window through which banks borrow from the central bank remained sharply elevated at 30.75%, highlighting the heightened cost of overnight liquidity.

Analysts say the widening gap between the policy rate and the OLF underscores stress in the interbank market, where rising demand for cash continues to push borrowing costs upward. The BOZ’s decision to hold the benchmark rate suggests that inflation containment remains its top priority, even as financial institutions navigate a challenging liquidity environment.

Market participants will be watching closely to see whether liquidity conditions improve in the coming weeks as the government continues its bond and treasury bill issuances, and as year-end payment cycles increase demand for cash.

The central bank is expected to review its monetary policy stance at its next meeting, depending on inflation trends, exchange rate movement, and broader financial stability indicators.