THE Bank of Zambia has cut its Monetary Policy Rate by 250 basis points to 10.75%, and Governor Denny Kalyalya is urging commercial banks to pass on the benefit to consumers and businesses. The reduction means commercial banks can access funds at a lower cost, with the expectation that savings will be passed on through

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THE Bank of Zambia has cut its Monetary Policy Rate by 250 basis points to 10.75%, and Governor Denny Kalyalya is urging commercial banks to pass on the benefit to consumers and businesses.

The reduction means commercial banks can access funds at a lower cost, with the expectation that savings will be passed on through lower lending rates.

The lower rate is intended to make borrowing more affordable for individuals and businesses, encouraging investment, business expansion and spending to support economic growth.

Kalyalya said in a statement that the Monetary Policy Committee took into account inflation outcomes and current projections, which are lower than previously indicated, as well as identified upside risks.

“The decision also reflects the need to align the monetary policy stance with the improved inflation outlook and is supportive of the national growth agenda,” he said.

Kalyalya said inflation continued to decline, falling to 6.5% in June from 7.1% in March, before declining further to 6.1% in September, within the 6-8% target band.

“On a quarterly basis, inflation averaged 6.6% and 6.3% in the second and third quarters, respectively, down from 8.0% in the first quarter,” he said.

He attributed the decline mainly to lower maize grain prices and the continued appreciation of the kwacha against major currencies, supported by sustained tight monetary policy and fiscal consolidation.

Lower maize prices were supported by a record maize harvest of 4.9 million metric tonnes during the 2025/26 farming season, Kalyalya said.

“The appreciation of the Kwacha was, largely, driven by higher export earnings, mainly from the mining sector, reinforced by improved foreign exchange liquidity arising from the Currency Directives issued in December 2025,” he said.

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