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LUSAKA, Sept 30 (Reuters) – Zambia’s central bank unveiled a much larger than expected 250-basis-point interest rate cut on Wednesday, saying inflation was well anchored and expected to remain near the bottom of its target range.

Zambia has started talks with a visiting International Monetary Fund mission over a new support programme after its previous $1.7 billion arrangement ended in January.

The Bank of Zambia lowered its monetary policy rate to 10.75% from 13.25%, whereas economists polled by Reuters had predicted a 25 bps cut.

The bank has lowered the rate at four consecutive meetings, though previous rate reductions were smaller.

Annual inflation softened to 6.1% in September from 6.2% the previous month. It is at its lowest level since 2018 and close to the base of the central bank’s 6%-8% target range.

The central bank marginally lowered its inflation forecasts from its previous meeting in May, now seeing inflation of 6.7% in 2026, down from 6.8%, and 6.0% in 2027 from 6.1%.

The need to align the monetary policy stance with the inflation outlook influenced the rate decision, Governor Denny Kalyalya told a press conference.

The central bank expects the economy to grow 5.3% in 2026 and 6.0% in 2027.