Stable Policy, Brighter Forecast



... BoZ Holds Interest Rate at 14.5% as Declining Inflation, Strong Maize Harvest, and Global Oil Trends Improve Economic Outlook

By Francis Maingaila

Lusaka, Zambia24 (23 - 05 - 2025) – The Bank of Zambia (BoZ) has maintained the Monetary Policy Rate (MPR) at 14.5 percent following its May 21–22 Monetary Policy Committee (MPC) meeting, citing easing inflation, improved food security, and continued financial stability.

BoZ Governor Dr. Danny Kalyalya said the decision reflects a favorable shift in inflationary trends, noting that inflation fell to 16.5 percent in April 2025 from a peak of 16.8 percent in February.


“Maintaining the current stance of monetary policy is deemed appropriate considering the recent decline in inflation, the downside risks, and the stability of the financial system,” said Kalyalya.

The annual average inflation rate for 2025 is projected at 13.8 percent, down from a previous estimate of 14.6 percent. It is expected to decline to 8.8 percent in 2026 and further to 7.5 percent in Q1 2027—within the BoZ’s 6–8 percent target band.



Key drivers of the improved outlook include:

Agriculture: A projected maize harvest of 3.6 million metric tonnes for the 2024/25 season, a major rebound from 1.5 million metric tonnes in 2023/24, is expected to ease food prices.

Non-Food Inflation: Declined to 13.2 percent due to lower airfares, motor vehicle prices, and detergent costs.

Global Oil Trends: Anticipated increases in crude oil supply and subdued demand are expected to further ease domestic fuel prices.

Food inflation, however, rose slightly to 18.9 percent but was outweighed by the decline in non-food inflation. The overall inflation trajectory remains downward.

The BoZ also highlighted improved foreign reserves, totaling US$4.5 billion (4.6 months of import cover) at end-March 2025. Additionally, the central bank purchased US$8.5 million worth of gold, raising its gold stockpile to US$233.6 million.

Domestic credit growth rebounded to 15.3 percent year-on-year in March 2025, from 5.4 percent in December 2024. 

Private sector credit rose by 23.0 percent, driven by increased lending to the manufacturing, mining, agriculture, and trade sectors. 

Lending to government also picked up, supported by strong demand for Treasury instruments.

Mining remained the leading source of foreign exchange, with export receipts rising 5.8 percent to US$556.8 million. Of this, US$281.1 million was remitted to BoZ for tax obligations.

Despite positive domestic indicators, the BoZ remains vigilant due to uncertainties in the global economy. 

“We are closely monitoring external developments which could influence Zambia’s macroeconomic stability,” said Kalyalya.

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