Zambia's central bank cut its policy rate for a second consecutive meeting on Wednesday, delivering a larger-than-expected 75-basis-point reduction as it projected an accelerated fall in inflation.

The Bank of Zambia lowered its Monetary Policy Rate to 13.50%, whereas analysts polled by Reuters had expected a cut to 14.00%.

Annual inflation slowed to 9.4% in January from 11.2% in December, and the bank now expects inflation to fall within its 6%-8% target band by the second quarter of this year.

Governor Denny Kalyalya said a strengthening of the local kwacha currency and a favourable agricultural backdrop were key factors behind the better inflation outlook.

Inflation is forecast to average 6.9% in 2026, compared to a 7.6% projection at the bank's last policy meeting in November.

It is expected to ease further in 2027, averaging 6.3% over the first three quarters of the year.

Inflation has been above the central bank's target range since 2019 as the copper-rich Southern African country has battled to emerge from a debt crisis via tortuous restructuring negotiations.

Zambia's secretary to the Treasury told Reuters earlier on Wednesday that the government had formally requested a new International Monetary Fund programme and hoped to reach a staff‑level agreement in May.

Kalyalya said the kwacha had gained about 4% against the dollar in the fourth quarter and was up a further 14% so far this year, helped by stronger foreign-exchange supply especially from the mining sector.

Total foreign-exchange supply by the mining sector reached about $759-million in the fourth quarter, up from $637-million in the third quarter, he added.