The Bank of Tanzania (BoT) has slightly adjusted the central bank rate (CBR) for the quarter ending September to 6.25 percent from 5.75 percent of the previous quarter aiming at containing inflation among other economic shocks.
Emmanuel Tutuba, BoT Governor said that the Monetary Policy Committee (MPC) which convened yesterday decided to adjust the CBR by 0.5 percent to contain inflation driven by the higher energy, fertilizer and transportation costs in the global market triggered by the prolonged geopolitical conflict in the Middle East with the United States.
“The MPC is confident that the adjustment of the CBR is appropriate enough to ensure inflation remains within the target range of 3-5 percent benchmark while supporting economic growth,” said Tutuba.
According to him, the adjustment in the policy rate will be strengthened by moderating food inflation due to adequate food supply from the 2025/26 harvest season.
Exchange rate to inflation is expected to be minimal due to high export earnings from gold, tourism activities and agricultural commodities in the second half of 2026.
With regard to the assessment of the global economy, Tutuba said that the MPC had learned that the global economy activity weakened during the quarter ending June 2026 due to the conflict in the Middle East which disrupted energy supply routes.
The direct impact in the economy has been hiked oil and fertilizer prices as well as freight and insurance costs. As a result, he said it has raised inflation risks and weakened growth prospects in 2026.
With regard to the assessment of the domestic economy the MPC observed that it remained strong despite external shocks such as the Middle East conflict.
“Based on high frequency economic indicators the GDP growth in Mainland Tanzania is estimated at 6 percent in the first half of 2026 underpinned by solid performance in agriculture , construction, mining, financial services, and transport activities,” said Tutuba.
According to him, the Zanzibar economy is estimated to have grown by 6.6 percent primarily driven by tourism and construction sectors. In the second half of 2026 growth is projected to remain high at about 6 percent in Zanzibar.
He said inflation also remained low despite increasing trends due to higher global energy and transportation costs. In Mainland Tanzania headline inflation rose to 4.2 percent in May 2026 from 3.2 percent in March 2026 remaining within the target of 3-5 percent.
“Fuel subsidy endorsed by the government in May and June helped to moderate the increase in inflation rate. In Zanzibar inflation reached 5.5 percent in May 2026 from 4.9 percent in March 2026 compared to the target of 5 percent,” said Tutuba.