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The Bank of Zambia (BoZ) is expected to hold its benchmark interest rate at 14.5 percent when the Monetary Policy Committee (MPC) announces its decision on Wednesday, according to Lusaka-based economist, Kelvin Chisanga.
He said the central bank should use the opportunity to send a clear signal on when and how it might begin easing monetary policy.
Chisanga argued that the current policy stance was still yielding positive results and should be maintained in the short term, with any shift towards lower rates tied to sustained macroeconomic stability.
“I think the current policy framework is still bearing good effects, and it will be absolutely important to maintain given the circumstances slightly ahead of us,” Chisanga said in commentary on Tuesday, ahead of the Monetary Policy Committee (MPC) announcement.
He argued that sustained inflation moderation and fiscal discipline could maintain credibility, anchor expectations, and prepare the market for a smoother policy glide path into 2026—ultimately softening any landing effects.
The MPC has been meeting this week to decide the next trajectory of the policy rate, with the benchmark currently at 14.5 percent.
Headline inflation eased to 13 percent in July from 14.1 percent in June, which Chisanga described as the clearest sign yet that the inflation tide is turning—driven largely by seasonal food supply gains and a more stable kwacha.
Read more: Bank of Zambia gets thumb up from economists on strategies to keep monetary policy rate steady
However, he cautioned that core inflation remains sticky, with fuel and power price adjustments still in the pipeline, while global financing conditions remain tight.
“This means the BoZ is still walking a fine line—cutting too early risks undoing hard-won currency stability, but holding too long could further choke already sluggish credit growth to the productive sectors,” he said.
Chisanga also noted that the International Monetary Fund’s recent endorsement of Zambia’s “appropriately tight” stance suggests a base case of holding rates at 14.5 percent to consolidate disinflation before pivoting.
Still, he said a measured 50-basis-point cut could be justified if policymakers wish to send a confidence signal to the real economy, leveraging improved reserves and stronger copper earnings as a buffer.
“Whichever path is taken,” Chisanga stressed, “the decision will be less about the August rate itself and more about forward guidance.”
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