DAR ES SALAAM (AEA) – The Bank of Tanzania (BoT) maintained its benchmark interest rate at 5.75% on Thursday, signaling a “cautious and watchful” stance as geopolitical tensions in the Middle East threaten to spill over into East African consumer prices.
In its April 2026 Monetary Policy Report, the central bank’s Monetary Policy Committee (MPC) noted that while the domestic economy remains resilient—with Q1 GDP growth hitting 6.2%—the risk of “imported inflation” via high shipping costs and energy prices remains elevated.
The ongoing instability in the Red Sea has significantly increased the cost of transit for goods entering the Port of Dar es Salaam, a critical gateway for the region.
“The decision to hold the rate reflects a balance between fostering the current growth momentum and preemptively guarding against inflationary shocks,” said BoT Governor Emmanuel Tutuba.
To improve the precision of its interventions, the MPC also narrowed the Central Bank Rate (CBR) corridor from 200 to 150 basis points.
This technical adjustment is intended to ensure that interbank lending rates remain more closely aligned with the central bank’s policy target, providing greater stability for the financial sector.
The growth figures remain a bright spot for President Samia Suluhu Hassan’s administration. The 6.2% expansion in Mainland Tanzania and 6.7% in Zanzibar were primarily driven by a boom in construction—fueled by large-scale infrastructure projects like the Standard Gauge Railway (SGR)—and a robust recovery in the tourism sector.
However, economists warn that the “Tanzanian Resilience” could be tested if the conflict in the Middle East escalates. “Tanzania is an oil importer and a price taker on the global stage,” said Dr. Lucas Mwita, an economist at the University of Dar es Salaam.
“Keeping rates steady for now is a vote of confidence in the current recovery, but the BoT has very little room for error if fuel prices spike again in the second half of the year.”
