- Decision
- Maintain
- Rate change
- 0 bps
- central bank rate
- 6%
The Bank of Tanzania’s Monetary Policy Committee maintained the Central Bank Rate (CBR) at 6 percent for the second quarter of 2025, judging that headline inflation around 3.2 percent—well below the 5 percent target—and solid output growth near 5.5 percent justify a steady stance while cushioning the economy against potential spillovers from heightened global trade tariffs and geopolitical conflicts. The CBR was also left unchanged at 6 percent in January. To reinforce the decision, the central bank will steer the 7-day interbank rate within a 4–8 percent corridor amid generally ample liquidity, even as smaller banks face higher funding costs. Mainland GDP expanded an estimated 5.5 percent in 2024 and is projected to accelerate to 6.1 percent in the second quarter of 2025, supported by agriculture, mining, construction and tourism, while private-sector credit grew 12.7 percent in the first quarter and the non-performing loan ratio held at 3.6 percent. The external position improved, with the current-account deficit narrowing to 2.6 percent of GDP in the year to March and foreign reserves exceeding USD 5.6 bn (4.5 months of import cover), as exchange-rate pressures were deemed seasonal. Against a backdrop of easing global inflation and widespread foreign policy rate cuts, the Committee pledged to press ahead with interbank market reforms, closely watch inflation and growth risks, and adjust policy if necessary ahead of its July review.
Rate evolution
From July 2025 to April 2026, the Bank of Tanzania cut the Central Bank Rate (CBR) by 25 basis points to 5.75% and then held it there for three meetings. The July easing reflected confidence that inflation would remain within the 3-5% target range, supported by prudent policies, harvest-related food supply and exchange rate stability, even as growth strengthened on infrastructure spending and private activity and external uncertainty from geopolitics and tariffs was judged to be moderating. The October 2025 and January 2026 holds cited the same mix of low inflation, strong growth, rapid private-sector credit, a sound banking system, stronger exports, foreign exchange liquidity and moderate oil prices as reasons to keep policy supportive.
By April 2026, however, the MPC had shifted to a more cautious risk balance, keeping the CBR at 5.75% and narrowing the CBR corridor as Middle East tensions and the oil-price surge increased risks to inflation and growth. On 2 July 2026, it raised the CBR by 50 basis points to 6.25% for the quarter ending September 2026 to contain inflation driven by higher global energy, fertilizer and transportation costs caused by the conflict. Although annual headline inflation in Mainland Tanzania rose to 4.2% in May from 3.2% in March, the MPC expected it to remain within the 3-5% target range, supported by adequate food supply from the 2025/26 harvests and limited exchange-rate pass-through amid high export earnings, while economic growth remained strong.