The Bank of Tanzania (BoT) has maintained its Central Bank Rate (CBR) unchanged at 6 percent for the first quarter of this year, to ensure adequate liquidity in the economy, tie-down inflation expectations below the target, and stimulates economic growth.

“The Monetary Policy Committee (MPC) observed that, keeping the CBR unchanged would ensure adequate liquidity in the economy, tie-down inflation expectations below the target of 5 percent, and facilitate the high economic growth of around 5.7 percent in the first quarter of 2025,” Emmanuel Tutuba, the BoT governor Emmanuel Tubuta said in a statement today.

Tutuba further said unchanged policy rate will also keep exchange rate pressures muted, thus limiting its impact on inflation and reducing incentives to transact in foreign currency in the country.

The BoT introduced a benchmark interest rate in January last year, as part of a new monetary policy framework, first setting it at 5.5 percent before raising it to 6.0 percent during the fourth quarter.

Tutuba said inflation remained stable throughout 2024, below the target of 5 percent in mainland Tanzania and is approaching the same target in Zanzibar. 

In the fourth quarter of 2024, annual inflation was around 3 percent, driven by the adequate food supply, supportive fiscal and monetary policies, and moderation in commodity prices, particularly crude oil, in the world market. 

Inflation is projected to remain low in the first quarter of 2025, at around 3.1 percent and 4 percent due to sufficient food availability, stable exchange rate, reliable power supply, and moderate global commodity prices, particularly crude oil. 

“The risk to the inflation outlook is low, but the OPEC+ production decision might slightly elevate the risk,” the governor said in a statement.

The MPC noted that projections for 2025 indicate continued strength of the economy, with mainland Tanzania expected to grow at around 6 percent and Zanzibar at approximately 6.8 percent. 

“The positive outlook is underpinned by several factors, including agricultural production, progress in construction projects, improvements in transport and logistics, reliable power supply, and supportive fiscal and monetary policies,” the statement reads.