The decision was announced on Thursday following a Monetary Policy Committee meeting, according to Yamungu Kayandabila, deputy governor of the Bank of Tanzania responsible for economic and financial policies, News.az reports, citing Xinhua.
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Geopolitical tensions weigh on outlook
Kayandabila said policymakers opted for a steady rate to maintain stability amid external pressures, particularly ongoing tensions in the Middle East.
“The MPC resolved to keep the central bank rate unchanged at 5.75 percent to balance risks to inflation and the economic growth outlook,” he said at a press briefing in Dar es Salaam.
He added that geopolitical developments have disrupted global trade flows, investment patterns, and overall economic stability, reinforcing the need for a cautious policy approach.
Monetary policy framework adjusted
Alongside the rate decision, the central bank announced a technical adjustment to its monetary policy framework.
The Monetary Policy Committee agreed to narrow the central bank rate corridor from 200 basis points to 150 basis points, effective from April 2026, in a move aimed at improving policy transmission.
Following the change, the target range for the 7 day interbank rate will be set between 4.25 percent and 7.25 percent during the second quarter.
Focus on liquidity management and stability
The central bank said it will actively manage liquidity conditions to ensure that the 7 day interbank rate remains within the new corridor.
Analysts say narrowing the corridor could help anchor short term interest rates more effectively, improving the transmission of monetary policy to the broader economy.
Balancing inflation and growth risks
The decision to hold rates reflects a balancing act between supporting economic growth and containing inflationary pressures.
While domestic conditions remain relatively stable, external risks, including global market volatility and geopolitical tensions, continue to shape the policy outlook.
Economists note that maintaining the current rate signals confidence in Tanzania’s economic trajectory, while also leaving room for adjustments should global conditions deteriorate further.
