Dodoma. The Bank of Tanzania (BoT) has decided to maintain the Central Bank Rate (CBR) at 5.75 percent for the first quarter of 2026, citing stable inflation prospects and favourable domestic and global economic conditions.
The decision was reached during the Monetary Policy Committee (MPC) meeting held on January 7, 2026, and formally announced on January 8.
According to the central bank, inflation is projected to remain within the target range of 3 to 5 percent, providing room to keep the policy stance unchanged in support of sustained economic growth.
In line with this outlook, the BoT said it will continue to implement monetary policy measures aimed at ensuring that the 7-day interbank rate evolves within the band of 3.75 to 7.75 percent.
Global outlook
The MPC noted that the global economy remained resilient throughout 2025 despite elevated trade tariffs, geopolitical tensions and persistent economic uncertainty.
The International Monetary Fund projects global growth at 3.2 percent in 2025, slightly lower than 3.3 percent in 2024, with the same pace expected to continue into 2026.
Global inflation trends were assessed as benign, having eased towards central bank targets in many countries, largely due to lower energy prices and the lagged effects of previously tightened monetary policies.
The committee observed that this environment is expected to persist, supporting Tanzania’s inflation outlook.
Crude oil prices declined in the fourth quarter of 2025, averaging between 62 and 65 US dollars per barrel, and are projected to remain at similar levels in the near term due to ample supply and subdued demand.
The MPC noted that this trend continues to ease inflationary pressures, reduce foreign currency demand and support exchange rate stability, given that oil imports account for about 17 percent of Tanzania’s total goods imports.
By contrast, gold prices surged to a record high of 4,421.65 US dollars per troy ounce and are expected to rise further in 2026.
The MPC said elevated gold prices will continue to bolster foreign exchange earnings and contribute to exchange rate stability in Tanzania and other gold-exporting economies.
Domestic performance
On the domestic front, the MPC assessed economic growth in 2025 as robust, estimated at around 5.9 percent, broadly in line with the six percent projection.
Growth was mainly driven by agriculture, mining and construction.
Zanzibar’s economy was estimated to have expanded by 6.8 percent, supported by construction, tourism and manufacturing activities.
Credit to the private sector expanded strongly by 20.3 percent in 2025, reflecting improved lending conditions and business confidence.
For the first quarter of 2026, growth in Mainland Tanzania is projected at six percent, while the Zanzibar economy is expected to grow by 7.2 percent.
Inflation remained low and stable during the fourth quarter of 2025, averaging 3.5 percent in Mainland Tanzania and 3.4 percent in Zanzibar.
The MPC attributed this performance to prudent monetary policy and favourable global conditions that eased exchange rate pressures and reduced imported inflation.
Inflation is expected to remain within the 3 to 5 percent target range throughout 2026.
The banking sector was assessed as sound, with adequate liquidity for lending and sufficient capital buffers to absorb potential shocks.
The loan portfolio continued to expand, while credit risk remained low, with the non-performing loan ratio standing at 3.1 percent, well below the tolerable level of five percent.
Payment systems were described as resilient and operating smoothly.
External and fiscal position
The external sector showed notable improvement, with the current account deficit narrowing to a five-year low of 2.2 percent of GDP in 2025.
This was attributed to stronger exports of gold and agricultural products, as well as improved performance in tourism and transport services, alongside lower global oil prices.
Zanzibar maintained a current account surplus, driven primarily by tourism.
Foreign currency liquidity was adequate in the fourth quarter of 2025, supported by export proceeds from cashew nuts, tourism and gold.
As a result, the Tanzanian shilling remained broadly stable against the US dollar, recording a slight appreciation of about 0.8 percent by the end of the quarter.
Foreign exchange reserves stood at more than 6.3 billion US dollars, sufficient to cover about 4.9 months of imports, above the minimum requirement of four months.
The BoT expects reserves to remain adequate in the first quarter of 2026, underpinned by strong export performance and moderate oil prices.
Fiscal performance was described as satisfactory, with improved tax revenue collection in both Mainland Tanzania and Zanzibar.
Although public debt increased moderately, it remained sustainable and at a moderate risk of debt distress.
The latest Debt Sustainability Analysis for 2024/25 shows that the ratio of public debt to GDP, in net present value terms, declined to 40.6 percent from 41.1 percent in 2023/24, remaining well below the 55 percent threshold.
Next policy review
The next MPC meeting is scheduled for April 2, 2026, with the CBR announcement for the second quarter expected on April 3.
