BoZ reduces lending rates
The Bank of Zambia has reduced the lending rates by 25 basis points to 14.25 percent, the Central Bank has disclosed.
In a press statement BoZ said the decision was arrived at by the Monetary Policy Committee (MPC) at its Meeting held on November 10 – 11, 2025.
Governor, Dr. Denny Kalyalya, announced the MPC’s decision at a Press Briefing held at the Bank of Zambia on November 12, 2025.
Highlights
Inflation declined further in Q3 and projections indicate a faster deceleration towards the lower bound of the 6-8% target band over the forecast horizon (Q4, 2025 – Q3, 2027).
This notwithstanding, the MPC was also mindful that inflation still remains above the target band and market expectations of inflation remain elevated.
Inflation declined to 12.3% in September from 14.1% in June. In October, it fell further to 11.9%. Key drivers were the continued appreciation of the Kwacha against major currencies, and the impact of the recent bumper maize harvest, which has contributed to lower prices of maize grain and maize meal.
The inflation outlook for 2025 has been revised upside to an average of 13.8% from 13.3 % projected in August. This is on account of the slower than anticipated decline in food prices.
From the second half of 2026 to Q3, 2027, inflation is forecast to decelerate faster than earlier projected in August.
The mining sector continued to be the largest source of foreign currency exchange supply in the market.
A net of USD 440.5 million was sold directly to the market in Q3, up from USD 418.0 million in Q2. USD196.3 million was remitted directly to #BoZ for tax obligations compared to USD262.1 million in Q2, 2025.
To moderate volatility in the exchange rate and support importation of critical commodities, the Bank of Zambia provided USD120.0 million to the market.
As a result, excess demand reduced substantially to USD24 million from USD 156 million in Q2, 2025.
Gross international reserves rose to USD5.2 billion at end-September (equivalent to 5.2 months of import cover) from USD4.7 billion (4.7 months of import cover) at end-June.
The build-up in reserves was mainly due to the disbursement of USD191.1 million under the IMF ECF arrangement, project receipts, net statutory reserve deposits, Bank of Zambia purchases, and interest earnings on reserves.
Decisions on the Policy Rate will continue to be guided by inflation outcomes, forecasts, and identified risks, including those associated with financial stability.
The next MPC Meeting will take place on February 9 and 10, 2026.