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Tanzania introduces new monetary policy framework to maintain low, stable inflation

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Locals wear face masks as a preventive measure against coronavirus, in Dar es Salaam, Tanzania, April 20, 2020. Tanzanian health authorities on Monday announced 84 new confirmed cases of COVID-19 in three days, bringing the total number of confirmed cases to 254 from 170 reported on Friday last week. (Xinhua)
Locals wear face masks as a preventive measure against coronavirus, in Dar es Salaam, Tanzania, April 20, 2020. Tanzanian health authorities on Monday announced 84 new confirmed cases of COVID-19 in three days, bringing the total number of confirmed cases to 254 from 170 reported on Friday last week. (Xinhua)

Tanzania’s central bank on Wednesday announced the introduction of a new monetary policy framework aimed at maintaining low and stable inflation and facilitating economic activities.

The Bank of Tanzania (BoT) said in a statement that the new framework called the interest rate-based monetary policy framework was also in alignment with the country’s commitment to harmonizing monetary policy frameworks in the East African Community.

The statement signed by the BoT governor, Emmanuel Tutuba, said under the new framework, the central bank will set the policy rate, known as the Central Bank Rate (CBR), consistent with low and stable inflation and conducive for the growth of the economy.

A change in the CBR will signal the direction of the monetary policy, either a tightening or expansionary monetary policy stance, said the statement, adding that the CBR will also be used as a guide for the determination of interest rates.

The statement said the public is advised to note that the adoption of the interest rate-based monetary policy framework does not imply the fixing of interest rates offered by banks and other financial institutions.

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