Tanzania holds interest  rate steady at 5.75% amid stable inflation and robust growth

By: Chidozie Nwali

The Bank of Tanzania (BoT) on Thursday maintained its benchmark interest rate, the Central Bank Rate (CBR), at 5.75%, a decision underpinned by projections of stable inflation and strong domestic economic performance.

Its  rate-setting Monetary Policy Committee (MPC) opted for a hold, signaling confidence that the current monetary stance is adequate to sustain price stability while supporting growth. The rate was previously cut by 25 basis points in July 2025.

Bank of Tanzania Governor Emmanuel Tutuba noted that the decision “reflects the projection of stable inflation within the target range of 3% to 5%.”

The latest official figures show the annual headline inflation rate stood at 3.4% in August 2025, a marginal increase from 3.3% in July, but comfortably within the central bank’s medium-term target band.

Inflation has consistently oscillated around the 3% mark for the past two years, demonstrating successful price management. The central bank cited robust economic performance as a key factor.

Economic growth for the first quarter of the year was 5.4% year-on-year, up from 5.2% in the corresponding period of 2024.

The BoT projects this momentum to continue, with growth of more than 6% estimated for the second and third quarters, driven by strong public and private investment and a robust export sector.

The current account deficit for the 2024/25 fiscal year is estimated to have narrowed to 2.6% of GDP (from 3.7% the previous year), thanks to strong performance in exports, particularly gold, tourism, cash crops, and manufactured goods.

The East African nation’s total exports in goods and services in the year ending April 2025 grew by 16.8% to reach an estimated $16.7 billion.

In the year ending May 2025, goods exports alone totaled approximately  $9.9 billion, marking a strong annual increase of 27.5%.

Tourism is  the gold-rich country’s top source of foreign exchange in 2025 Generated  $3.92 billion in the year ending May 2025, narrowly surpassing gold which generated $3.38 billion.

Other top export include: cashew nuts, coffee and tobacco.

The rate hold at 5.75% aims to keep the 7-day interbank rate—the central bank’s operating target—within the established corridor, ensuring sufficient liquidity in the market to meet growing demand associated with key economic activities like the harvest season.