The Monetary Policy Committee (MPC) of the Bank of Tanzania has increased the Central Bank Rate (CBR) from 5.75 percent to 6.25 percent for the third quarter of 2026 ending in September, in a move aimed at curbing inflation while maintaining economic stability.
The decision was announced on July 3, 2026 by the Chairperson of the MPC and Governor of the Bank of Tanzania, Emmanuel M. Tutuba, during a briefing in Dar es Salaam.
The committee said the adjustment is intended to ensure inflation remains within the official target range of 3 to 5 percent, amid rising global economic pressures.
According to the MPC, inflationary risks have increased due to external shocks, particularly the ongoing conflict in the Middle East, which has pushed up global prices of crude oil, fertilisers and transport costs.
These developments have contributed to higher costs of goods and services in domestic markets.
Despite the policy tightening, the committee expressed confidence in the resilience of Tanzania’s economy, noting that growth prospects remain strong.
It said expectations of a good agricultural harvest in the 2025/26 season are likely to ease food prices, while increased earnings from gold, agricultural exports and tourism will continue to support the stability of the Tanzanian shilling.
The MPC added that a stable currency is expected to reduce import costs and help contain inflationary pressures in the second half of 2026.
It further noted that Tanzania’s economic fundamentals remain solid despite global uncertainties.
On the global front, the committee reported that world economic growth slowed in the quarter ending June 2026 due to heightened geopolitical tensions in the Middle East.
The situation has disrupted oil supply chains and international trade routes, leading to higher global inflation and weaker growth projections for 2026.
Domestically, Tanzania’s economy continues to perform well compared to global trends. Mainland Tanzania is estimated to have grown by 6 percent in the first half of 2026, driven by strong performance in agriculture, construction, mining, financial services and transport.
In Zanzibar, the economy is projected to grow by 6.6 percent, supported mainly by tourism and construction activities. Overall growth is expected to remain above 6 percent in the second half of the year.
Inflation in Mainland Tanzania rose to 4.2 percent in May 2026, up from 3.2 percent in March, but remained within the central bank’s target range. Government fuel subsidies introduced in May and June helped slow the pace of price increases.
In Zanzibar, inflation increased to 5.5 percent in May 2026 from 4.9 percent in March, though it is expected to gradually stabilize as external pressures ease.
The MPC noted that liquidity conditions in the economy remained stable during the second quarter of 2026, with credit to the private sector growing at an average of 24 percent, supported by increased business activity.
The banking sector was described as strong, profitable and well-capitalised, with non-performing loans remaining low at 2.9 percent in May 2026, below the regulatory threshold of 5 percent.
Foreign exchange reserves have also strengthened, reaching about 6 billion US dollars—enough to cover 4.3 months of imports of goods and services, above the national benchmark of four months.
The MPC said reserves are expected to increase further, supported by export earnings and gold purchases from local producers.
Government revenue performance has remained strong, with domestic revenue expected to reach 16.8 percent of GDP in the 2025/26 financial year, up from 15.6 percent previously, driven by improved tax collection efficiency.
The MPC, led by Governor Emmanuel M. Tutuba, reaffirmed its commitment to monitoring both domestic and global economic developments and responding promptly to inflationary risks to ensure macroeconomic stability.
The next Monetary Policy Committee meeting to review the Central Bank Rate is scheduled for October 7, 2026.
