The Monetary Policy Committee that met on 18 January 2024 has announced the Central Bank interest rate to be 5.5% for the first quarter of this year to meet economic objectives for the period.
The Central Bank’s announced interest rate is aligning with goals of ensuring inflation stays within 5 percent target and boosting economic growth to a target of 5.5 percent or more for 2024
Of course, the interest rate is focused on ensuring the value of the shilling against foreign currencies continues to hold steady.
To enable the achievement of these goals, the Central Bank will use various monetary policy materials to ensure interest in the interbank financial market here in the country (interbank market) becomes calm.
“Thus, the Central Bank will be monitoring the trend of 7-day loan interest rates in the market and taking steps to ensure that the interest rate changes are within the range of no more than 2 percent below or above (+/-2%) of the Central Bank’s interest rate,” said the Central Bank Governor and the Chairman of the Policy Committee. Finance Minister when announcing the Committee’s decision.
The statement by the Financial Policy Committee is the first one issued since the Central Bank of Tanzania decided to change the system of implementation of the financial policy from using the fund to starting using the system of interest from January this year.
The system of using interest is expected to increase the efficiency in the implementation of the Financial Policy. Either, the changes are in line with the Treaty of the Establishment of the East African Community Monetary Union, being one of the steps towards the single currency and the single East African Central Bank.
Tanzania becomes the fourth country in the community to use the system of interest, the others are Kenya, Uganda and Rwanda.
The Central Bank interest rate for the second quarter of 2024 will be announced in April this year. This is in accordance with the calendar of the Monetary Policy Committee meetings to be released soon.
Chanzo BoT
