Tanzania’s central bank said it would maintain its key interest rate at 5.75 per cent for the first quarter of 2026, citing a stable inflation outlook and the need to support ongoing economic growth.
The decision, made by the Bank of Tanzania’s (BoT) Monetary Policy Committee (MPC), marks the second consecutive quarter in which the central bank has left the rate unchanged. The committee said inflation is expected to remain within the government’s target range of three to five per cent throughout the year.
“Current projections indicate favourable economic conditions will persist, and maintaining the policy rate will support robust growth,” the MPC said in a statement. The central bank will continue to manage liquidity to keep the seven-day interbank lending rate within a corridor of 3.75 to 7.75 per cent.
Tanzania’s economy has shown resilience over the past year. Mainland growth reached an estimated 5.9 per cent in 2025, close to the six per cent target, buoyed by strong performances in agriculture, mining, and construction. Zanzibar’s economy is estimated to have expanded even faster, at 6.8 per cent, driven by construction, tourism, and manufacturing.
BoT Governor Emmanuel Tutuba, who chairs the MPC, noted that inflation remained subdued, averaging 3.5 per cent on the mainland in the final quarter of 2025. He attributed the stability to “prudent monetary policy and favourable global conditions, which eased pressure on the exchange rate and lowered imported inflation.”
The health of Tanzania’s financial sector was also highlighted in the decision. Private sector credit grew 20.3 per cent in 2025, while the ratio of non-performing loans in the banking sector remained low at 3.1 per cent, well below the regulatory ceiling of five per cent. The figures reflect a stable lending environment and sound credit risk management.
Externally, the country’s current account deficit narrowed to a five-year low of 2.2 per cent of GDP last year. The improvement was underpinned by rising exports of gold, agricultural products, and tourism services, as well as a drop in global oil prices. The Tanzanian shilling strengthened slightly, appreciating around 0.8 per cent against the US dollar in the last quarter of 2025. Foreign exchange reserves remain robust at over US$6.3 billion, covering nearly five months of imports.
The BoT’s decision to hold the rate contrasts with neighbouring Kenya and Uganda, which maintain higher policy rates of nine per cent and 9.75 per cent respectively, positioning Tanzania as one of the region’s more accommodative monetary policy environments.
Analysts say the low interest rate stance could help attract investment and sustain domestic demand, aligning with the broader economic agenda under President Samia Suluhu Hassan. The government is prioritising a stable business climate as it moves to implement its long-term Development Vision 2050.
Tanzania’s central bank is expected to announce its next monetary policy decision for the second quarter of 2026 on April 3.
