Bank of Tanzania Maintains Key Interest Rate at 6% to Support Economic Recovery

The Bank of Tanzania (BoT) has announced its decision to keep the benchmark interest rate steady at six percent for the fourth quarter, aiming to boost consumer and business spending and sustain the country’s ongoing economic recovery. This marks the second time the rate has remained unchanged since it was raised from 5.5 percent in April.

BoT Governor Emmanuel Rutuba, who chaired the Monetary Policy Committee (MPC) meeting, explained that low inflation, which remains below the five percent target, was a key factor in the decision. He noted that inflation is expected to remain stable, potentially leading to lower commodity prices.

Governor Rutuba also highlighted the positive outlook for the Tanzanian economy, pointing to increased foreign exchange inflows from tourism and mining. He emphasized that sectors like agriculture, transport, and manufacturing have played a crucial role in private sector growth, supported by public investment in infrastructure.

The BoT’s projections are optimistic, with expectations of favorable weather conditions benefiting agriculture and power generation, along with improvements in infrastructure, such as railways, roads, and ports.

Despite the decision to keep rates unchanged, Tanzania maintains the lowest lending rate in the East African Community (EAC). In comparison, Kenya’s central bank recently lowered its benchmark rate to 12.75 percent, while Uganda’s stands at 10 percent, Burundi at 12 percent, and Rwanda at 6.5 percent.