Zambia’s central bank reduced its main interest rate for the first time since August 2020, signalling confidence that inflation is on a sustained downward trajectory, Bloomberg reported.

The monetary policy committee lowered the rate to 14.25 percent from 14.5 percent, Governor Denny Kalyalya told reporters in Lusaka on Wednesday. “The committee took into account that inflation has declined further in the third quarter, and the projections indicate a faster deceleration towards the lower bound of our 6–8 percent target band over the forecast horizon,” he said.

The move comes after months of declining inflation. According to the Bank of Zambia, headline inflation fell from 16.5 percent in March to around 13 percent in July 2025, aided by a strong maize harvest, lower fuel prices, and a stabilising kwacha. The central bank now projects inflation will reach its 6–8 percent target range by early 2026, earlier than previously expected.

Zambia introduced the 6–8 percent target band in 2018, but persistent currency depreciation, food-price volatility, and external pressures had kept inflation above the ceiling for most of the past five years.

Despite the easing, Zambia continues to face fiscal and external vulnerabilities, including past debt restructuring and climate-related shocks, which could influence inflation dynamics in the coming months.