Dar switches to interest rate policy next January

TANZANIA will switch to an interest rate-based policy to influence evolution of the main monetary variable in the economy next January as analysts said it is the right time.

Bank of Tanzania (BoT) said in a statement issued late Wednesday that it turns to the new policy that focuses on interest rates from the current monetary targeting framework which focuses on money supply.

“Interest rate-based monetary policy framework has proven to be more efficient and transparent in delivering the desired monetary policy outcomes in the countries that have been using it,” BoT said in a statement that also had operational guidelines.

The policy interest rate normally influences monetary variables such as consumer prices, exchange rate, or credit expansion, among others in the economy.

Vertex International Securities, Advisory and Capital Markets Manager, Ahmed Nganya said the switching would come at the right time based on the economic expansion of the country.

“We think it is right time to shift the policy framework,” Mr Nganya told ‘Daily News’ yesterday.

Mr Nganya, an economist, said the central bank was gauging the level of financial inclusion and the effectiveness of the rate-based policy as the late mainly depends on the formal part of the economy.

“We believe the efforts to improve financial inclusion have borne huge results evidenced by the strides made through mobile money services,” Mr Nganya, a stockbroker and analyst, said.

Tanzania started the process of switching to an interest rate base policy over a decade ago and coming next January will join other 45 countries that their central bank are using the framework, which started in 1990.

Dr Hildebrand Shayo, an economist-cum-investment banker, told the ‘Daily News’ that what BoT is proposing is a sign of a stronger gearing of monetary policy towards price stability in the country.

“This context is important because of the way financial markets operate, the gradual opening up of the economy and its integration into international markets,” Dr Shayo said.

The monetary policy plays an important role in stabilising economic fluctuations and, especially, in controlling the rate of inflation and market interest rates.

Dr Shayo said however that he was worried that the quality of data generated by the economy may prove to be difficult to perform a detailed analysis.

“Depending on a degree of aggregation [BoT] use it is always difficult to perform a detailed analysis of monetary transmission and this in our case will be affected by the quality of data used,” he said.

The economist-cum-investment banker said the quality of data might not offer answers to some major questions that are less sensitive to deciding which is the right rate to go for and in particular.

However, BoT said the monetary policy consists of decisions and actions taken by the central bank to influence the amount of money supply in the economy and the cost of borrowing.

“This is done using monetary policy instruments at the disposal of the central bank [including inflation rate],” the statement said.

BoT said the other six key areas to be looked at while determining the interest rate namely the monetary policy framework, the objective of monetary policy, and the intermediate target.

Other key areas are operating targets, monetary policy instruments and monetary policy communication strategy.

Furthermore, the BoT “is mandated to design and use any other instruments considered to be appropriate for monetary policy.”

Related Articles

Back to top button
hacklink panel hacklink al hacklink sollet hdxvipizle jojobet casibom
hack forum hack forum hacklink hacklink panel cami halısı cami halısı cami halısı cami halısı cami halısı saricahali.com.tr cami halısı cami halısı cami halısı cami halısı evden eve nakliyat ofis taşıma seo hizmeti Onwin yagnatourism.com tatilmoni.com Marmaris casibom casibom casibom casibom casibom casibom casibom casibom casibom casibom casibom casibom casibom casibom casibom casibom vds Bahis Siteleri onwin Diyarbet google.com.tr
ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino ByCasino
Tipobet Tipobet Tipobet Tipobet Tipobet Tipobet Tipobet Tipobet
Sahabet Sahabet Sahabet Sahabet Sahabet Sahabet Sahabet Sahabet
Onwin Onwin Onwin Onwin Onwin
Starzbet Starzbet Starzbet Starzbet Starzbet Starzbet Starzbet
Starzbet Starzbet Starzbet Starzbet Starzbet Starzbet