By:ThinkBusiness Africa
The Bank of Zambia (BoZ) on Wednesday aggressively cut its benchmark lending rate by 75 basis points, lowering it to 13.50%. A move signaling growing confidence in the country’s cooling economy.
The decision, announced by Governor Denny Kalyalya following a two-day Monetary Policy Committee (MPC) meeting, marks the second consecutive reduction in the policy rate. The cut was significantly deeper than the 25-basis-point easing most economists had predicted, surprising financial markets and signaling a pivot toward supporting economic growth.
According to governor Kalyalya, a sharper-than-expected decline in consumer prices was the primary catalyst for the central bank’s bold move.
Annual inflation tumbled to 9.4% in January 2026, down from 11.2% in December. This marks the first time in nearly three years that Zambia’s inflation has dipped into single digits.
“Projections indicate a faster deceleration towards the lower bound of the 6%–8% target band than we initially anticipated in November,” Governor Kalyalya stated during the press briefing.
This January, the Zambian Kwacha has maintained a steady trajectory against the US Dollar, aided by high copper export earnings and improved foreign exchange flows.
Also, on fiscal reforms, debt-restructuring efforts and disciplined government spending have reduced the risk of “fiscal dominance,” allowing the central bank more breathing room.
While the rate cut is a victory for borrowers and businesses looking for cheaper credit, the BoZ warned that it remains “cautiously optimistic.” Global risks, including potential trade volatility and fluctuations in copper prices, remain on the radar.
