The Monetary Policy Committee (MPC) of the Bank of Tanzania has decided to maintain the Central Bank Rate (CBR) at 5.75% for the first quarter of 2026. This decision, which was made on 7th January 2026, is anchored on the expectation that inflation will remain within the target band of 3% to 5%. The MPC states that current economic conditions are favorable and that keeping the benchmark rate unchanged will support continued robust growth. To implement this, Tanzania’s central bank is to guide the 7-day interbank rate to progress within a range of 3.75% to 7.75%.
Additionally, the Committee’s outlook is reinforced by supportive global and domestic trends. Internationally, global growth remains stable despite trade tensions and geopolitical uncertainty while inflation in many countries is trending downward towards central bank targets. This deflationary environment, fueled by lower energy prices, is expected to help contain imported inflation in Tanzania. Essentially, global commodity prices are favorable, with crude oil prices projected to remain toned down near USD 62- USD 65 per barrel, relieving pressure on import costs, while gold prices have hit record highs, boosting Tanzania’s foreign exchange earnings and supporting exchange rate stability.
In September 2023, the Bank of Tanzania started the Domestic Gold Purchase Programme to buy gold locally from miners and traders with a view of strengthening its foreign exchange reserves and enhance the sustainability of the country’s reserves. At the start of the programme, the Bank had bought more than 0.4 tonnes of gold and the target was acquisition of more than 6 tonnes of gold by December 2023.
As of 13th June 2025, the Bank of Tanzania had purchased 5.02285 tonnes of refined gold valued at USD 554.28 million, and reports in November 2025 indicated that the Bank would not sell its gold reserves despite record high gold prices, with the bank reiterating that the purchases are intended to diversify the country’s foreign exchange reserves rather than profit-making.
Drivers of Tanzania’s Economic Growth
Domestically, Tanzania’s economy demonstrated robust performance in 2025, with growth estimated at 5.9%, driven by agriculture, mining, and construction. The Zanzibar economy grew even faster at 6.8% and growth is projected to remain strong in Q1 2026. Inflation on the other hand remains firmly under control, averaging 3.5% in Mainland Tanzania and 3.4% in Zanzibar in late 2025, a result of prudent monetary policy and favorable global conditions. The MPC expects inflation to stay within the target range throughout the coming year.
The health of Tanzania’s external sector and financial system provides a solid foundation for this stability. The current account deficit narrowed to a five-year low of 2.2% of GDP in 2025 – a five-year low, aided by strong exports of gold, agricultural products, and tourism services, as well as lower oil import bills. Consequently, foreign exchange reserves are robust at over USD 6.3 billion, sufficient to cover 4.9 months of imports (Kenya: USD 12.384 billion, 5.3 months of import cover). The banking sector remains sound, with ample liquidity, strong capital buffers, and a low non-performing loan ratio of 3.1% (Kenya: 16.5%), reflecting a favorable lending environment.
The fiscal metrics also show positive trends, with satisfactory revenue performance and sustainable public debt. The public debt to GDP ratio has declined to 40.6%, well below the 55% threshold, indicating moderate risk of debt distress. This combination of monetary stability, external strength, financial sector soundness, and fiscal prudence creates a conducive environment for sustained economic growth.
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