By Mubanga Mubanga
Bank of Zambia (BOZ) Governor Dr Denny Kalyalya says the Kwacha appreciated by 4.1 percent in the last quarter of 2025.
And Dr Kalyalya said the monetary policy committee had decided to reduce the Monetary Policy Rate (MPR) by 75 basis points to 13.5 percent.
Speaking during the monetary policy committee press briefing in Lusaka yesterday, Kalyalya attributed the appreciation of the Kwacha to an uptick in foreign exchange supply and improved market sentiments.
“The Kwacha appreciated further by 4.1 percent against the US dollar to K22.80 in the last quarter of 2025. This was supported by the pick-up in foreign exchange supply and improved market sentiments,” Kalyalya said. “The sovereign credit rating upgrade, surge in copper prices, and the Staff-Level Agreement reached with the IMF supported market sentiments. The year-to-date rate of appreciation of the Kwacha against the US dollar is 14.2 percent.”
Kalyalya said the committee in arriving at the decision to reduce MPR, took into consideration the further decline of inflation in the fourth quarter of 2025.
“At its February 9-10, 2026 meeting, the Monetary Policy Committee decided to reduce the Monetary Policy Rate by 75 basis points to 13.5 percent. In arriving at this decision, the committee took into account the further decline in inflation in the fourth quarter of 2025,” Kalyalya said. “The projected faster fall of inflation into the 6-8 percent target band than was forecast in November 2025, and the need to maintain an appropriate monetary policy stance.”
On inflation, Kalyalya said the projection was that inflation was going to be within the band by the second quarter of 2026.
“The current projection is that inflation will fall into the 6-8 percent target band at a faster pace than was forecast in November 2025. Further, it is expected to be within the band by the second quarter of 2026 and move to the lower bound by the second quarter of 2027,” Kalyalya said. “On average, inflation is forecast to be 6.9 percent in 2026 compared to 7.6 percent projected in November 2025. It is expected to ease further to 6.3 percent in 2027. The more positive outlook largely reflects the impact of the lagged effects of the recent appreciation of the exchange rate and expected favourable agricultural output.”
Kalyalya said the gross international reserves increased to $5.5 billion, which represented 4.8 months of import cover.
“Gross international reserves increased to USD5.5 billion at end-December 2025 (equivalent to 4.8 months of import cover) from USD5.2 billion (equivalent to 5.2 months of import cover) at end September 2025 . The import cover reduced in the fourth quarter due to the upward revision of projected imports for 2025,” Kalyalya said. “Apart from mining tax receipts and market purchases, other sources of reserve growth were project receipts, net statutory reserve deposits, interest earnings on reserves, and domestic gold purchases.”
Kalyalya said gold purchased so far stood at 226.51kg with a market value of $446.9 million.
“During 2025Q4, 175.23kg of gold, with a purchase value of USD23.5 million, was bought. This brings the total holdings to 3,226.51kg with market value of USD446.9 million,” said Kalyalya. “Since the Bank embarked on purchasing locally produced gold in December 2020, the current price of gold is USD5,031.4 per ounce.”
