Dar es Salaam. The Bank of Tanzania has increased its benchmark interest rate to safeguard domestic price stability against escalating global geopolitical shocks.
The Monetary Policy Committee met on July 2, 2026 to review the economic outlook.
The committee decided to raise the Central Bank Rate from 5.75 percent to 6.25 percent.
This newly adjusted rate will apply for the entire quarter ending September 2026.
The official decision follows an assessment of rising international commodity strains under statement MPC No. 244.
Geopolitical conflict in the Middle East remains the primary driver behind this monetary tightening.
The disruptions have severely impacted global trade routes and energy supplies.
Consequently, the world market has experienced sharp increases in oil, fertiliser, and transportation costs.
The central bank intends to contain these imported inflationary pressures through proactive policy measures.
Policymakers expressed strong confidence that the rate adjustment will keep inflation within the official target range of 3 to 5 percent.
Domestic factors are expected to help cushion the impact of global shocks.
Robust food supply from the 2025/26 harvests will continue to moderate local food prices.
Furthermore, high export earnings from gold, tourism, and agricultural commodities will minimise the pass-through effect of exchange rate fluctuations.
The domestic economy continues to demonstrate notable resilience despite severe external headwinds.
Real GDP growth in Mainland Tanzania reached approximately 6 per cent during the first half of 2026.
Solid performance in agriculture, construction, mining, financial services, and transport activities anchored this expansion.
Concurrently, the Zanzibar economy grew by 6.6 per cent, stimulated by strong tourism and construction sectors.
Domestic inflation has edged upward but remains within tolerable national benchmarks.
Annual headline inflation in Mainland Tanzania rose to 4.2 percent in May 2026 from 3.2 percent in March 2026.
Temporary fuel subsidies provided by the Government in May and June successfully mitigated steeper price spikes.
In Zanzibar, annual inflation accelerated to 5.5 percent, slightly exceeding the 5 percent target.
The broader financial sector maintains a stable and highly resilient posture.
Private sector credit growth remained robust at an average rate of 24 percent.
Banking institutions preserved profitable operations while maintaining sufficient capital buffers to withstand short-term shocks.
Asset quality improved significantly, evidenced by a low non-performing loans ratio of 2.9 percent in May 2026.
External accounts exhibited a satisfactory balance. The annual current account deficit stood at 2.4 percent of GDP for the period ending June 2026.
Foreign exchange reserves remained adequate at approximately $6 billion, covering 4.3 months of projected imports.
This reserve level comfortably satisfies the statutory national minimum threshold of 4 months.
The central bank reaffirmed its strict commitment to maintaining long-term price stability.
The Monetary Policy Committee will continue to monitor global and domestic economic conditions closely.
The next committee meeting is scheduled for 7 October 2026.
