- Decision
- Maintain
- Rate change
- 0 bps
- central bank rate
- 5.75%
The Bank of Tanzania’s Monetary Policy Committee left the Central Bank Rate (CBR) unchanged at 5.75 percent for the second quarter of 2026, citing the need to balance emerging inflation pressures from higher energy costs against a still-robust growth outlook amid Middle-East geopolitical tensions. The CBR has been steady at 5.75 percent since a 25-basis-point cut in July 2025. Alongside the hold, the Committee narrowed the policy corridor to ±150 bp, setting a 4.25–7.25 percent target range for the 7-day interbank rate and instructed the central bank to guide market rates within this band. Inflation averaged 3.3 percent in Mainland Tanzania and 4.5 percent in Zanzibar in the first quarter—within the 3–5 percent target—and is expected to remain contained, while GDP grew an estimated 6.2 percent and 6.7 percent respectively, with Q2 growth projected at 6.1 percent and 6.6 percent; private-sector credit expanded 22.8 percent and the banking sector’s non-performing loan ratio fell to 2.9 percent. Externally, the current-account deficit narrowed to 2.2 percent of GDP in the year to March, foreign reserves exceeded USD 6.2 billion (4.8 months of imports) and the exchange rate stayed broadly stable. The MPC noted crude oil prices have surged above USD 100 per barrel, intensifying global inflation risks and policy uncertainty, and said it will keep assessing the economic impact of the Middle-East conflict ahead of its July meeting.
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.