Central bank chooses continuity as it maintains its rate at six percent
Bank of Tanzania headquarters in Dar es Salaam. PHOTO | FILE
What you need to know:
- The MPC expects Tanzania’s economy to continue growing swiftly, the food supply to be adequate and exchange rate pressures to ease due to increased foreign exchange inflows from tourism, gold and commercial crops.
Dar es Salaam. The Bank of Tanzania (BoT) is maintaining the central bank rate (CBR) at six percent for the quarter ending September 2024 as it seeks to maintain the economic growth momentum while keeping key macroeconomic fundamentals within the current levels.
The Monetary Policy Committee (MPC) said in a statement signed by BoT governor Emmanuel Tutuba that the MPC’s assessment of the economic outlook and balance of risks during its quarterly meeting held on July 3 showed that implementation of the Monetary Policy in the previous two quarters had anchored inflation expectations well below the five percent target.
“This also is reinforced by a positive outlook for the global economy, especially expectations of falling inflation in most countries, easing financial conditions in international markets and moderate prices in the world market,” the statement said.
The MPC expects Tanzania’s economy to continue growing swiftly, the food supply to be adequate and exchange rate pressures to ease due to increased foreign exchange inflows from tourism, gold and commercial crops.
The central bank revised its CBR to six percent from 5.5 percent in April to curb inflationary pressures arising from global economic developments.
Data from Monthly Economic Review (MER) reports has proven that the policy was having the desired impact, with headline inflation remaining unchanged at 3.1 percent in May.
The committee expects positive domestic economic conditions driven by favourable weather for agriculture, adequate power supply, improvement in transport infrastructure, as well as policy and reform programmes.
“The MPC forecast growth in the first and second quarters of 2024 also to be high, at around 5 and 5.4 percent, respectively,” the statement said.
Private sector credit continued to be the main driver of money supply in the economy, growing on an annual average of 16.4 percent during the second quarter of 2024 compared to 17.1 percent in the preceding quarter.
The banking sector remained liquid, profitable and adequately capitalised, with deposits, assets and loans all increasing.
“Asset quality improved, as reflected by a lower NPL ratio of 4.4 percent in May 2024, below the tolerable level of 5 percent and 5.5 percent recorded in the corresponding period in 2023.”
