THE Bank of Tanzania (BoT) has decided to keep the Central Bank Rate (CBR) unchanged at 6 percent for the third quarter of this year.

In a statement after its quarterly meeting held on 3rd July 2024, the Monetary Policy Committee (MPC) decided to keep the Central Bank Rate (CBR) said the assessment of the outlook of the economy and the balance of risks indicate that, the implementation of monetary policy in the previous two quarters has successfully anchored inflation expectations well below the target of 5 percent.

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 MPC expects Tanzania's economy to continue growing strongly, food supply to be adequate, and exchange rate pressures to moderate owing to increased foreign exchange inflows from tourism, gold, as well as cash crops and food,” Emmanuel Tutuba, the BoT Governor said.

On global economic activity, the MPC observed that growth outturns in the first and second quarters of 2024 have been strong in most countries. Inflation has been falling, financial conditions easing, and central banks in most countries have receded the interest rate hiking cycle.

Crude oil prices declined, but edged up towards the end of June 2024.

The price of gold remained elevated, as investors sought safe-haven assets, amidst currency depreciation and geopolitical conflicts.

“On balance, these global economic conditions are expected to prevail in the outer period of 2024 and in the subsequent year, despite facing a risk of further escalation of geopolitical conflicts and trade disputes,” he said in a statement yesterday.

“Domestic economic conditions have improved significantly in the recent past, on the back of implementation of policies and reforms for fostering high economic growth.”

The central bank governor noted that the outlook also is positive, driven by expected favourable weather for agriculture, adequate power supply, improvement in infrastructure (especially railways, roads, and ports), as well as policies and reform programmes.

The economy continued to grow, recording a growth of 5.1 percent in 2023, higher than 4.7 percent in the previous year driven by agriculture, mining, quarrying, construction, and financial intermediation, mainly credit to the private sector

Tourism, which cuts across many activities, also contributed to the strong growth.

The MPC forecast growth in the first and second quarters of 2024 also to be high, at around 5 and 5.4 percent, respectively.

Similarly, the Zanzibar economy expanded by 7.4 percent in 2023, compared to 6.8 percent in 2022, driven largely by tourism activities, food services, construction, and real estate. Economic growth is projected to be high in the second half of 2024 and the years ahead.

Inflation remained below the target of 5 percent and consistent with the EAC and SADC convergence criteria.

In April and May 2024, inflation was 3 percent and 3.1 percent, respectively, attributed to low food inflation from adequate food supply, complemented by prudent monetary and fiscal policies.

Inflation in Zanzibar also declined to the medium target of 5 percent, owing to a decline in both food and non-food prices.

Inflation is projected to remain low in the second half of 2024 and beyond, ranging from 3-4 percent, driven by prudent monetary and fiscal policies, adequate food supply, stable power supply, and moderate consumer goods prices in the world market.