Zambia's central bank lowered its main interest rate on Wednesday, saying it saw inflation staying within its target range despite risks associated with the Iran war.

The Bank of Zambia lowered its Monetary Policy Rate by 25 basis points to 13.25%, whereas economists polled by Reuters had predicted that interest rates would remain unchanged.

"In arriving at this decision, the (bank) took into account ... the expected favourable maize harvest during the current crop marketing season (and) the observed relative stability in the exchange rate of the kwacha," Governor Denny Kalyalya told a press conference.

It was the third consecutive rate cut, though it was smaller than February's 75-basis-point reduction.

Inflation has slowed for four months in a row. It stood at 6.8% year on year in April, down from 7.1% the previous month and within the bank's 6%-8% target range.

Kalyalya said that while inflation was projected to remain in the target band, uncertainty and upside risks linked to the U.S.-Israeli war against Iran meant a cautious policy rate adjustment was appropriate.

The copper-rich Southern African country suspended some fuel taxes for three months from April to try to mitigate the impact of rising global energy prices on households and businesses.

The central bank now sees inflation averaging 6.8% in 2026 and 6.1% in 2027.