Bank of Tanzania: We will let market to decide rates
Bank of Tanzania headquarters. PHOTO | FILE
What you need to know:
- The Bank of Tanzania has said that the movement of both interest and exchange rate in Tanzania during ongoing second half of financial year 2018/19 will remained market driven, although will participate in the interbank foreign exchange market solely for liquidity management purposes and intervene occasionally to smooth out short-term volatility in the exchange rate.
Dar es Salaam. The Bank of Tanzania has said it will continue to leave interest and exchange rate policies to be market driven during the second half of 2018/19 financial year.
The BoT monetary policy statement for February 2019 has said during the period, the monetary policy will remain accommodative with the target of stimulating growth of credit to the private sector and aggregate demand, while benefiting from low inflation expectation.
On interest rates, the policy document has said it will continue to be market determined while it will continue to promote development of a more transparent and efficient interbank cash market.
This will enable the improvement of price discovery and reduce interest rate volatility, while promoting transmission mechanism of the monetary policy signals.
On exchange rate, the central bank said it will also remain market determined and it will participate in the interbank foreign exchange market solely for liquidity management purposes and intervene occasionally to smooth out short-term volatility in the exchange rate and maintain an orderly market.
The policy documents added that the operations will, however, continue to be undertaken without compromising the objective of maintaining adequate level of international reserves, which is necessary for hedging against unexpected external shocks.
