The Bank of Tanzania's Monetary Policy Committee voted unanimously to maintain the central bank rate at 6.0% at its January meeting, citing stable domestic inflation while flagging emerging risks from external factors.

The decision, widely anticipated by economists, reflects the central bank's balancing act between supporting economic growth and managing inflationary pressures that have intensified across the East African region.

Inflation Remains Contained — For Now

Headline inflation stood at 4.2% in December 2025, comfortably within the central bank's 3-5% target range. Food prices, which carry significant weight in Tanzania's inflation basket, have remained relatively stable following strong agricultural harvests.

"The current monetary policy stance remains appropriate given the inflation outlook," Governor Emmanuel Tutuba said in a post-meeting statement. "However, we are closely monitoring external developments that could affect price stability."

"The central bank is threading a needle here. Domestic conditions support stable rates, but they can't ignore what's happening regionally."

— Dr. Honest Ngowi, University of Dar es Salaam

External Pressures Mount

The central bank's statement highlighted several external risks that could challenge the inflation outlook:

• Global commodity prices remain elevated, particularly for fuel and fertilizers
• Regional currency weakness in Kenya and Uganda has increased imported inflation pressures
• Supply chain disruptions from Red Sea shipping tensions continue to affect import costs
• El Niño weather patterns could affect next season's agricultural output

The Tanzanian shilling has been relatively stable against the US dollar, depreciating approximately 3% over the past year — a modest decline compared to regional peers. This relative strength has helped contain imported inflation but has also reduced competitiveness for exporters.

What the Rate Decision Means for Business

For Tanzanian businesses, the steady rate environment provides continued access to relatively affordable credit. Commercial bank lending rates have declined modestly over the past year, with prime rates now averaging approximately 15% for top-tier corporate borrowers.

"The stable rate environment is helpful for planning purposes," said Amina Mwangi, CFO of a major Tanzanian manufacturing company who spoke on condition of anonymity. "But we're still dealing with significant cost pressures from imports, particularly energy and raw materials."

Growth Outlook Remains Strong

The central bank maintained its GDP growth forecast of 5.6% for 2026, supported by ongoing infrastructure investment, recovery in tourism, and continued strength in mining exports.

Recent indicators support this optimistic outlook:

• Private sector credit growth accelerated to 9.5% year-over-year in December
• Tourism arrivals reached a new record in 2025, surpassing pre-pandemic levels
• Manufacturing output expanded for the 18th consecutive quarter

Looking Ahead

Most economists expect the Bank of Tanzania to maintain its current policy stance through the first half of 2026, absent any significant shock to inflation or growth.

"The next decision point will likely come in the second half of the year," said Peter Kiguta, East Africa economist at Absa Bank. "If global commodity prices moderate and regional currencies stabilize, there could be room for a modest cut. But for now, patience is the right approach."

The MPC is scheduled to meet next in March 2026.