Tanzania Keeps Key Policy Rate Steady at 5.75%

The Bank of Tanzania raised its key interest rate by 50 basis points to 6.25% on July 3rd, 2026, marking its first hike since April 2024. Policymakers said the decision was intended to ensure inflation remains within the 3%–5% target range while sustaining economic growth. The annual inflation rate inched up to 4.2% in May from 4% in April, marking the highest level since April 2023, on the back of higher fuel and fertilizer costs amid the Middle East crisis. Looking ahead, the central bank expects inflationary pressures to remain contained, supported by a strong harvest that should keep food prices stable and robust export earnings that are expected to cushion exchange rate pass-through to import prices. Meanwhile, the MPC said economic growth remained resilient despite external headwinds, including the ongoing Middle East conflict, with GDP projected to expand by around 6% in the first half of 2026.

The Bank of Tanzania held its benchmark interest rate unchanged at 5.75% during the January 2026 monetary policy meeting, marking the second consecutive hold. The central bank highlighted that the decision reflects a supportive stance toward sustained economic growth, noting that inflation remains well-contained within the 3%-5% target range. Annual consumer price growth in November eased slightly to 3.4%, following a 3.5% rise in October, continuing a pattern of relative stability observed over the past two years. Meanwhile, the central bank projects the economy to expand by 5.9% in 2025, driven by strength in agriculture, mining, and construction sectors.