The Bank of Zambia’s Monetary Policy Committee (MPC) decided to keep the Monetary Policy Rate at 14.5% at its August 11-12, 2025, meeting.
This decision follows a continued downward trend in inflation, which fell to 14.1% in June and 13.0% in July 2025.
The Committee noted that while inflation has started to decline, it remains above the 6-8% target band, with uncertainties from global trade policies and geopolitical tensions persisting.
Inflation has been declining since March 2025, when it stood at 16.5%. The key factors behind the reduction include improved maize supply, lower fuel prices, and the appreciation of the Kwacha against major currencies.
The Bank of Zambia expects the declining inflation trend to continue over the next eight quarters, with inflation projected to enter the 6-8% target band by the first quarter of 2026.
The updated forecast predicts inflation averaging 13.3% in 2025, down from the previous 13.8%, and averaging 7.7% in 2026.
This improvement is attributed to the lagged effects of the stronger exchange rate, lower food and energy prices, and past monetary, structural, and fiscal policy measures.
The MPC highlighted that risks to the inflation outlook remain mostly on the downside, driven by higher expected copper export earnings and subdued crude oil prices.
Progress on external debt restructuring is also expected to support macroeconomic stability and a stronger inflation outlook.
Despite these positive developments, the Committee emphasised that inflation is still elevated relative to the target band, and market expectations remain high.
The Bank will continue to monitor inflation outcomes, forecasts, and financial stability risks to guide future policy rate decisions. The next MPC meeting is scheduled for November 10-11, 2025.
