Market intelligence suggests monetary policy rate to remain stable at 14.5 percent, as BoZ set to act

The Bank of Zambia (BoZ) is set to announce its monetary policy rate decision this Friday, with most market watchers expecting the central bank to maintain the current rate at 14.5 percent.

This follows a recent increase of 59 basis points, which aimed to bring inflation back within the BoZ’s target range of six to eight percent and anchor inflation expectations.

Some analysts expressed believe the central bank may begin easing rates in the second half of the year if the current disinflationary trend continues.

Read more: Bank of Zambia gets thumb up from economists on strategies to keep monetary policy rate steady

Private Sector Development Association (PSDA) Chairperson, Yusuf Dodia, is among those forecasting a hold on the policy rate. In a telephone interview, Dodia cited the recent appreciation of the kwacha against the US dollar as a sign of stability.

“Well, seeing that the kwacha has appreciated against the US dollar in the past few days, I suspect the monetary policy rate will not change. I think the Bank of Zambia will either maintain it or perhaps slightly reduce it, but my assumption is that it will remain unchanged,” he said.

Dodia emphasized that monetary policy decisions are typically driven by major shifts in economic conditions.

“Since we are seeing the exchange rate stabilise—or even shift in favour of a stronger kwacha—my assumption is that the policy rate will hold steady, at least for this month,” he added.

The BoZ decision would be closely watched for signals on the central bank’s inflation control strategy and its broader economic outlook, amid continued regional and global financial pressures.

Economist, Webster Bwalya, also expressed confidence that the policy rate would be maintained.

He attributed his optimism to the kwacha’s recent performance and a slight decline in the annual inflation rate from 16.8 percent to 16.5 percent.

“Usually the MPR is adjusted when inflation increases. Therefore, with this relative stability, the rate is expected to remain at 14.5 percent. Maintaining the MPR will allow economic activities to continue growing,” Bwalya said.

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