BoT holds key rate at 6.25pc for fourth quarter

Dar es Salaam. The Bank of Tanzania (BoT) has maintained its Central Bank Rate (CBR) at 6.25 percent for the fourth quarter of 2026, seeking to keep inflation within its target range while sustaining economic growth amid rising global oil prices and the prospect of El Niño-related rains.

The decision was reached by the bank’s Monetary Policy Committee at a meeting on October 7, 2026, Governor Emmanuel Tutuba told reporters on October 8.

The rate, which was also maintained at 6.25 percent for the quarter ending September, is intended to preserve price stability while supporting economic activity.

“This rate will enable us to continue controlling inflation and facilitate economic growth as planned,” Mr Tutuba said.

He said headline inflation was expected to remain within the medium-term target of between three and five percent during the quarter ending December 2026, despite emerging domestic and international price pressures.

The central bank, however, warned that rising global oil prices, partly driven by continuing conflicts in the Middle East, could exert pressure on the prices of various goods and services in Tanzania.

The anticipated El Niño-related rains could also affect domestic prices, adding to the challenges facing policymakers as they seek to maintain price stability without undermining economic expansion.

Despite these risks, Mr Tutuba said the prevailing monetary policy stance, anchored by the 6.25 percent CBR, was expected to help keep inflation within the target range and cushion the economy against the effects of these pressures.

He added that government measures to address the emerging challenges would complement monetary policy efforts, helping to contain inflation and sustain economic growth at the planned rate.

The decision comes against a backdrop of relatively moderate inflation in both Tanzania Mainland and Zanzibar, according to the central bank’s monetary policy statement issued on October 8.

Inflation on the Mainland rose to 4.3 percent in August 2026, from 4.1 percent in the second quarter, but remained within the BoT’s target range.

In Zanzibar, inflation eased to 5.6 percent in August from six per cent in July.

The figures suggest that price pressures remain manageable for now, although the trajectory of international oil prices and weather conditions will be important in determining the inflation outlook in the coming months.

The monetary policy statement also reported that the Mainland economy grew by six percent in the first quarter of 2026, while Zanzibar recorded growth of 6.7 percent.

Economic growth was expected to strengthen further in the second and third quarters.

Meanwhile, private sector credit recorded strong growth, averaging 32.5 percent in the quarter ending September 2026, indicating continued expansion in lending to businesses and households.

The central bank also reported that foreign exchange reserves remained adequate, standing above $6 billion in September, equivalent to 4.3 months of import cover.

However, the current account deficit on the Mainland widened slightly to 2.5 percent of gross domestic product in the year ending September 2026, from 2.4 percent in June.

 Zanzibar continued to record a current account surplus, supported by tourism receipts.

The latest decision signals the BoT’s intention to maintain a balance between containing inflation and supporting economic activity as external price shocks and weather-related risks threaten to complicate the outlook for the final quarter of the year.