Dar es Salaam, Tanzania – July 3, 2025 – In a powerful move signaling robust economic confidence, the Bank of Tanzania’s Monetary Policy Committee (MPC) today announced a significant reduction in the Central Bank Rate (CBR) by 25 basis points, bringing it down to 5.75 percent from 6.00 percent. This decision, effective for the July to September 2025 quarter, is poised to unleash a new wave of economic dynamism, encouraging investment and further stimulating the nation’s already strengthening growth trajectory.
Governor Emmanuel M. Tutuba, addressing a press conference this morning, underscored the Committee’s conviction in Tanzania’s economic resilience. “This decision reflects the Committee’s confidence in the inflation outlook,” he declared, highlighting that inflation has consistently remained within the desirable 3–5 percent target band and is projected to stay stable. This favorable inflation environment, he noted, is a direct result of prudent monetary and fiscal policies, the ongoing harvest season, and a remarkably stable exchange rate.
A Foundation of Stability and Growth
Tanzania’s economic narrative in 2025 has been one of consistent strength. The MPC’s assessment paints a picture of an economy steadily gaining momentum, fueled by substantial public infrastructure investments and a vibrant private sector benefiting from an improving business climate.
Key highlights from the MPC’s assessment include:
- Robust GDP Growth: Mainland Tanzania registered impressive GDP growth of 5.8 percent in Q1 2025 and 5.5 percent in Q2 2025, largely propelled by strong performances in agriculture, construction, and financial services. The outlook remains exceptionally optimistic, with projections for 6.0 percent growth in Q3 and a surging 6.9 percent in Q4. This upward trajectory is significantly supported by ongoing infrastructure projects for the upcoming CHAN and AFCON tournaments, alongside continued investment in agriculture and mining. Zanzibar is expected to mirror this positive trend.
- Inflation Under Control: Despite global uncertainties, headline inflation in Mainland Tanzania averaged a modest 3.2 percent in Q2 2025, firmly within the target range. While localized food inflation experienced a temporary uptick due to heavy rainfall disruptions, core inflation eased, demonstrating the broader stability of prices. Zanzibar also saw a decline in headline inflation.
- Healthy Financial Sector: Money supply (M3) continued its moderate expansion, reflecting increased economic activity, with private sector credit growth reaching a robust 16.7 percent. This indicates easing financial conditions and a responsive business environment. The banking sector remains sound, liquid, profitable, and well-capitalized, with non-performing loans (NPLs) declining to a healthy 3.4 percent, well below the prudential threshold.
- Prudent Fiscal Management: Both Mainland Tanzania and Zanzibar demonstrated strong fiscal performance, with revenue collections on target and expenditure aligned with available resources. This commitment to fiscal consolidation complements monetary policy in ensuring low and stable inflation, while public debt remains sustainable.
- Strengthening External Sector: The current account deficit significantly narrowed in Q2 2025, primarily driven by robust exports of gold, tourism, cash crops, and manufactured goods. Foreign exchange reserves reached an impressive USD 6 billion by the end of June 2025, providing coverage for a healthy 4.8 months of projected imports, one of the highest levels in recent years.
- Shilling’s Resilient Stability: The Tanzanian shilling has shown remarkable stability against major trading currencies, depreciating by a mere 0.2 percent against the US dollar in the year ending June 2025, a stark contrast to the 12.5 percent depreciation in the previous year. This stability is attributed to improved foreign exchange liquidity, strong export earnings, prudent central bank policy, and regulations encouraging local currency transactions.
Navigating Global Headwinds with Confidence
While acknowledging increased global economic and trade uncertainty stemming from geopolitical conflicts and rising tariffs, the MPC expressed confidence in Tanzania’s ability to withstand external shocks. Recent negotiations and agreements suggest moderating global risks, and Tanzania’s diversified economy and consistent growth-enhancing policies are expected to act as a crucial buffer.
The reduction in the CBR is a strategic move designed to further lubricate the economy, making borrowing cheaper for businesses and individuals, thereby stimulating investment, consumption, and job creation. It’s a clear signal that the Bank of Tanzania is proactive in supporting sustainable economic expansion while steadfastly maintaining price stability.
As Tanzania enters the new quarter, the lowered CBR and the encouraging economic indicators set the stage for continued prosperity, cementing the nation’s position as a beacon of stability and growth in the region. The next MPC meeting is scheduled for October 1, 2025, with the subsequent CBR announcement on October 2, 2025, promising further insights into Tanzania’s dynamic economic journey