The Bank of Tanzania raised its Central Bank Rate (CBR) to 6% from 5.5% for the second quarter of 2024, covering April to June, following a meeting of its Monetary Policy Committee on 3 April. The decision was announced on 4 April 2024.
The bank said the increase, based on its March 2024 macroeconomic forecast, was intended to contain the lingering inflationary pressures arising from global economic developments. The CBR will operate with a corridor of two percentage points above and below the 6% rate.
INFLATION WITHIN TARGET
The tightening came even though domestic inflation was low. Inflation averaged 3.0% in the first quarter of 2024, within the national target of not exceeding 5%, and the bank said it expected inflation to remain consistent with the target, supported by monetary policy and adequate food supply.
ECONOMIC BACKDROP
The committee estimated that the economy grew by 5.1% in 2023, up from 4.7% in 2022, and estimated growth of around 5.1% in the first quarter of 2024. Zanzibar's economy grew by more than 6% in 2023. Credit to the private sector expanded at an average rate of about 17%.
The current account deficit narrowed to USD2,701.4 million in the year to February 2024, from USD5,133.6 million in the corresponding period a year earlier. Foreign exchange reserves exceeded USD5.3 billion at the end of March 2024, equivalent to 4.4 months of import cover. The banking sector's non-performing loans ratio stood at 4.3%, below the 5% threshold.
The shilling depreciated by 1.8% against the US dollar in the first quarter, while the seven-day interbank rate remained within a band of 3.5% to 7.5%. On the global front, crude oil averaged about USD80 a barrel and gold about USD2,071 an ounce. The statement was issued by Governor Emmanuel Tutuba.
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