TANZANIA: BANKS faced tightened liquidity in October, driven by higher-than-expected seasonal spending on cashew nut purchases, which surpassed both projections and the previous season’s production.
The Bank of Tanzania’s latest review shows the 7-day IBCM rate averaged 8.48 per cent in October, slightly above the policy corridor but down from 8.58 per cent in September.
As a result, the Bank increased liquidity injections through reverse repos to 2.88tri/-, up from 2.16tri/- the previous month.
The BoT kept the central bank rate (CBR) at 6 per cent for Q4 this year, with the 7-day Tanzania Interbank Cash Market (IBCM) rate expected to remain within +/-200 basis points of the CBR.
The committee decided to maintain the CBR at 6.00 per cent, citing stable inflation levels at the lower end of the target range. Other contributing factors included stabilising economic growth, supported by improving domestic and global economic conditions.
The growth of broad monetary aggregates showed a modest increase in October this year, driven by higher growth in foreign assets and private sector credit.
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The extended broad money supply grew by 14.6 per cent, up from 11.4 per cent in September this year and 12.4 per cent in October last year.
The 14.6 per cent growth in the extended broad money supply in October, up from 11.4 per cent in September, indicates a positive shift in liquidity, driven by stronger foreign asset growth and increased private sector credit.
This suggests improved economic activity, with higher access to financing and stronger external reserves, which could support further economic expansion and stability.
