Tanzania’s central bank has left its benchmark interest rate unchanged at 5.75 percent for the third consecutive meeting, opting for caution as stable inflation and solid growth are increasingly weighed against rising external risks from the conflict in the Middle East.
The decision, announced on Thursday by the Bank of Tanzania, reflects confidence that domestic price pressures remain manageable for now, even as higher global oil prices begin feeding into transport and fuel costs across the economy.
Speaking at a press conference in Dar es Salaam, Deputy Governor Yamungu Kayandabila said the bank expects inflation to remain within its target range of 3 percent to 5 percent in the second quarter, despite mounting uncertainty tied to the Iran conflict.
“The major risk to our outlook is the conflict in the Middle East,” Kayandabila said, underlining growing concern among African policymakers over the economic fallout from rising geopolitical tensions and disrupted energy markets.
The central bank’s decision comes a day after Tanzania’s energy and water regulator announced an increase in domestic fuel prices, blaming the move on higher international oil prices triggered by the conflict. That adjustment has raised concerns over whether energy-related inflation could begin spilling into broader consumer prices in the months ahead.
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So far, however, inflation has remained relatively subdued. Consumer prices in Tanzania rose 3.2 percent year-on-year in February, slightly down from 3.3 percent in January, continuing a pattern of moderate inflation that has largely held over the past two years.
The central bank says the outlook remains supported by a combination of low food prices and a stable Tanzanian shilling, both of which are helping offset the inflationary impact of higher fuel and transport costs.
Kayandabila said those factors should help preserve overall price stability even if energy inflation worsens. “We are confident, especially energy inflation will go up but the headline inflation will remain within the target,” he said.
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The hold also suggests the central bank is trying to strike a balance between supporting economic activity and guarding against imported inflation at a time when many economies are facing renewed external shocks.
Tanzania’s economy is still expected to post solid growth. The central bank projects 6.1 percent growth in the second quarter, while the finance ministry forecast in February that the economy would expand by 6.3 percent in 2026, up from 5.9 percent last year.
That outlook positions Tanzania among the stronger-growing economies in East Africa, with resilience in agriculture, services and domestic demand helping to cushion against external volatility.
Still, the path ahead may become more complicated if oil prices continue to rise or if supply disruptions linked to the Middle East crisis deepen. Like many fuel-importing African economies, Tanzania remains vulnerable to higher import bills, transport costs and pressure on household spending if energy prices remain elevated for a prolonged period.
For now, though, the central bank appears comfortable holding its stance, signalling that inflation is still under control and that tighter policy is not yet warranted.
The decision keeps Tanzania on a steady monetary path, but officials have made clear that the biggest threat to that stability is coming not from within the economy, but from events far beyond its borders.
