BoT overhauls monetary policy

DAR ES SALAAM: THE Bank of Tanzania (BoT) has officially transitioned to an interest rate-based policy, effective this month, as announced in a statement released on Wednesday.

The decision reflects BoT’s commitment to refining its approach to monetary policy in order to influence the primary monetary variable in the economy.

The newly adopted framework, as outlined in the statement, is expected to bolster the efficacy of monetary policy by fostering low and stable inflation while facilitating robust economic activities.

BoT emphasized that this strategic shift aligns with Tanzania’s dedication to harmonizing its monetary policy framework within the East African Community and other regional economic communities where the country holds membership.

Under the revamped framework, BoT will now determine the policy rate, referred to as the Central Bank Rate (CBR, the Bank of Tanzania would set the policy rate known as the Central Bank Rate (CBR), consistent with low and stable inflation conducive to economic growth.

“A change in the CBR will signal the direction of monetary policy, indicating either a tightening or expansionary monetary policy stance,” the BoT said in the statement.

The statement further said that the CBR would also serve as a guide for determination of interest rates by financial institutions.

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

“The interest rates will continue to be determined by market forces in line with other economic policies of the country.”

Related Articles

Back to top button