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Zambia Cuts Rates as Inflation Eases, Bucks Global Pause
May 13, 2026 at 9:36 AM UTCZambia’s central bank extended its easing cycle as inflation is projected to cool further, even as most policymakers globally adopt a wait-and-see approach to gauge the Iran war’s impact on their forecasts.The monetary policy committee lowered the benchmark interest rate to 13.25% from 13.5%, Governor Denny Kalyalya told reporters in the capital, Lusaka, on Wednesday. That was the third successiveBloomberg Terminal rate cut.
Hold the Line: Why the Bank of Zambia Is Likely to Keep Rates at 13.5%
Disinflation has arrived ahead of schedule, but rising oil prices, geopolitical risk, and mounting cost pressures are beginning to reprice the monetary policy path. The Bank of Zambia enters tomorrow’s Monetary Policy Committee decision with inflation finally inside the 6 - 8% target band and business confidence at its highest level since March 2019. On the surface, the macro picture appears increasingly supportive of policy easing. But beneath the improving headline numbers, the inflation outlook is becoming more fragile, not more secure. The Iran ceasefire deal remains effectively on “life support,” keeping global crude prices elevated and reintroducing imported inflation risks into the economy. Meanwhile, Zambia’s April private sector pulse, as measured by the Purchasing Managers’ Index, softened modestly to 51.2 from 51.4, a signal that growth remains expansionary, but momentum is beginning to moderate. In this environment, the central bank’s challenge is no longer about achieving disinflation; it is about defending it. From a risk-management perspective, the case for maintaining the benchmark rate at 13.5% has strengthened materially. DISINFLATION HAS ARRIVED - BUT THE EASY GAINS ARE OVER Inflation at 6.8% represents a significant policy achievement. Price stability has returned faster than many market participants anticipated, reinforcing confidence in the Bank of Zambia’s tightening cycle and restoring a degree of macroeconomic credibility. However, monetary policy is forward-looking, not backward-looking. The current macro backdrop suggests the economy is transitioning from a clean disinflation phase into a more complex stabilization environment. The April PMI reading of 51.2, down slightly from 51.4, confirms that private sector activity remains in expansionary territory, but the pace of acceleration is slowing. Growth remains intact, yet the momentum impulse is becoming less powerful. This distinction matters enormously for policymakers. Historically, the most difficult phase of inflation management is not bringing inflation down, it is keeping it down once external shocks begin to re-emerge. Zambia may now be entering precisely that phase. IRAN RISK IS REINTRODUCING GLOBAL ENERGY VOLATILITY The dominant macro risk since the last MPC meeting has shifted decisively from domestic demand conditions toward external supply-side pressures. The collapse in confidence around the Iran ceasefire process has materially altered the global inflation...
Analysts predict Bank of Zambia to retain benchmark rate as market ...
The Bank of Zambia (BoZ) is expected to announce its latest monetary policy rate decision Wednesday, with analysts predicting that the central bank will maintain the benchmark rate at 13.5 percent despite continued easing in inflation. The anticipated announcement comes as Zambia records slower annual inflation, strengthening expectations for further monetary policy easing, although rising
Headlines - Zambia Daily Mail News Website
TRYNESS TEMBO Lusaka GOVERNMENT has so far signed public-private partnership (PPP) agreements worth US$2 billion since the establishment of the Public Private Partnership Council (PPPC) as it ...
