BoT to announce bank rate in two weeks

Dar es Salaam. The Bank of Tanzania (BoT) has said it will issue the regulatory bank rate in two weeks as part of the implementation of the new monetary policy framework.

Last week, the central bank announced the adoption of a new monetary policy starting this month to maintain price stability and support sustainable economic growth. This marked a shift from using the quantity of money in conducting monetary policy.

Monetary policy consists of decisions and actions taken by the central bank to ensure that the supply of money in the economy is consistent with growth and price objectives set by the government.

In a statement issued yesterday, BoT's director of economic research and policy, Dr Suleiman Misango, said the Monetary Policy Committee (MPC) would be meeting to determine and approve the policy rate, which will be announced immediately after the meeting.

He said the announced rate will last for three months and is subject to review in the next period.

"We are the kitchen, and the markets should trust the BoT. The policy rate is reviewed quarterly and is subjected to review to determine whether it is maintained or not,” he said.

He added that the central bank will monitor the interbank cash market (IBCM) seven days a week to see if the banks borrow close to or depart from the IBCM.

"If they depart from the IBCM, the central bank opens the door to enable banks to borrow below the IBCM," said Dr Misango.

However, he cautioned that monetary transitions in regulating inflation, growth and foreign exchange stability take time.

Additionally, he said the BoT will place weight on curbing inflation, while growth will take the second priority and foreign exchange stability the last.

"BoT is mandated to control inflation, but if inflation is at an acceptable rate, then it will shift to economic growth and foreign exchange, after all, centred on controlling price stability," Dr. Misango said.

The shift in monetary policy reflects BoT’s commitment to refining its approach to monetary policy to influence the primary monetary variable in the economy.

The newly adopted framework, as outlined in the statement, is expected to bolster the efficacy of monetary policy by fostering low and stable inflation while facilitating robust economic activities.

BoT emphasised that this strategic shift aligns with Tanzania’s dedication to harmonising its monetary policy framework within the East African Community and other regional economic communities where the country holds membership.