BoZ may hold policy rate at 14% as inflation remains unchanged in January, say analysts

The Bank of Zambia (BoZ) is likely to maintain its benchmark lending rate at an eight-year high of 14.00 percent as it announces the monetary policy rate for the first quarter tomorrow [Wednesday], analysts predict.

This expectation is driven by Zambia’s annual inflation rate, which remained unchanged at 16.7 percent in January 2025, according to an analysis by Access Bank Group.

“The main event this week will be the BoZ interest rate decision. Consumer price inflation in Zambia remained unchanged at 16.7 percent year-on-year in January compared to December.

This suggested that the devastating effects of the drought and sharp depreciation of the Kwacha, which increased the cost of imports, may be starting to filter out,” the analysis stated.

In November 2024, BoZ raised the policy rate by 50 basis points to 14.0 percent to curb persistent inflation, which remains well above the central bank’s target range of 6-8 percent.

BoZ Governor, Denny Kalyalya, had projected that inflation would average around 15.0 percent in 2024, with a revised 2025 forecast of 13.9 percent, up from the previous estimate of 12.7 percent .

The rise is attributed to currency depreciation and higher electricity tariffs linked to drought-induced power shortages.

“In the first three quarters of 2026, inflation is projected to decline to 9.0 percent, though still above target,” Kalyalya noted.

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