By Kamphembele Ngulube
The Bank of Zambia (BoZ) has maintained the Monetary Policy Rate at 14.5%, following its latest Monetary Policy Committee (MPC) meeting held on May 21–22, 2025.
Why is this important for entrepreneurs?This decision was made to support the recent drop in inflation, which fell to 16.5% in April (from 16.8% in February), while also ensuring the financial system remains stable.
Key Highlights You Should Know:
Inflation is expected to fall faster than previously projected.BoZ now expects inflation to average 13.8% in 2025 (down from 14.6%), then drop further to 8.8% in 2026, and 7.5% by early 2027, which is within Zambia’s target range of 6–8%.
Maize and fuel prices are expected to go down.
Thanks to a bumper maize harvest (3.6 million metric tonnes expected for 2024/25), food prices should ease. Lower global oil pri
ces and increased supply are also expected to bring fuel costs down.
ces and increased supply are also expected to bring fuel costs down.
The Kwacha has slightly strengthened, gaining 3.3% to trade at K27.80 per US dollar by May 22, 2025. This was helped by more dollars flowing in from the mining sector and international investors. Foreign exchange reserves are strong, now sitting at US$4.5 billion, equal to about 4.6 months of import cover. The mining sector continues to be a major source of forex, contributing over US$556 million in Q2, with US$281 million going directly to BoZ as tax payments. Non-Zambian investors now hold about 25% of government securities, showing increased confidence in the Zambian economy.What This Means for You:
Borrowing costs remain the same, so business loans will likely not get cheaper yet. If inflation continues falling, we might see better loan rates in the future. The strong maize harvest and lower fuel prices could reduce costs for food-related and transport-heavy businesses. A stable Kwacha helps businesses plan better and manage import costs. Foreign investor confidence is growing — a good sign if you’re looking to attract outside capital.Stay Ahead: The next MPC meeting is scheduled for August 11–12, 2025. Stay informed, because changes in interest rates and inflation directly affect your cash flow, pricing, and profits.
For more details:
• Full BoZ Statement (PDF): https://www.boz.zm/MPC_Statement_Q2_2025.pdf
• Governor’s Media Presentation (PDF): https://www.boz.zm/Governors_Media_Presentation_May_2025.pdf
