- Decision
- Lower
- Rate change
- 25 bps
- central bank rate
- 5.75%
The Bank of Tanzania’s Monetary Policy Committee cut the Central Bank Rate by 25 bp to 5.75 % for the third quarter of 2025, citing sustained inflation within the 3–5 % target band, projected stability in price pressures and a solid domestic growth outlook driven by public infrastructure spending and stronger private-sector activity. The move follows two consecutive meetings—in January and April 2025—at which the rate was held at 6.00 %. The central bank will steer the 7-day interbank rate inside a 3.75–7.75 % corridor. Headline inflation averaged 3.2 % in Q2 2025 and is expected to remain anchored by prudent policies, a good harvest and a stable exchange rate, while GDP growth reached 5.8 % in Q1 and 5.5 % in Q2 and is forecast to accelerate to 6.9 % in Q4; private-sector credit expanded 16.7 % and the banking system’s NPL ratio eased to 3.4 %. Externally, the current-account deficit narrowed to USD 797 m in Q2, foreign-exchange reserves rose to about USD 6 bn (4.8 months of imports) and the shilling slipped only 0.2 % against the USD over the year. The Committee noted moderating global inflation alongside tariff-driven and geopolitical uncertainties, with oil prices easing but gold prices surging, and judged domestic risks to the outlook as minimal, expecting inflation to stay within target.
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.