The Central Bank (BOT)’s Monetary Policy Committee (MPC) has revealed that Tanzania’s inflation remains within the target range of 3-5 percent while risk to inflation outlook is moderate despite the recent rise of global oil prices.
According to a BOT statement shared on its social media on platforms, the committee held its 215th Ordinary Meeting on 23rd July, 2021, to discuss recent conduct of monetary policy, economic performance as well as outlook thereof.
“The MPC was satisfied with the conduct of monetary policy in May and June 2021, which succeeded to sustain adequate liquidity in banks and stabilize money market interest rates at low levels,” the lander of the last resort statement said.
The policy, a statement added, creates favourable condition for increasing in bank lending to the private sector and reduce interests rate on loans.
According to BOT, the MPC has observed that the improving global economic environment will provide great impetus to recovery of economic activities.
“Inflation remained low, within the target range of 3-5 percent, and risk to inflation outlook is moderate, notwithstanding recent rise of global oil prices.
“Foreign exchange reserves were adequate and consistent with country and EAC benchmarks, hence contributing to stability of exchange rate,” the committee observed.
However, the committee emphasized on the need to diversify export markets and improve value addition.
It was also revealed by the MPC that there was slow uptake of loans by the private sector in 2020/21, highlighting negative effects of COVID-19 on businesses as one of the reasons.
The committee anticipates that the improving global economy, executing additional measures by the Bank of Tanzania intended to create conditions for reducing interest rates on loans will provide impetus to increase loans to the private sector.
Other measures which will boost loans to the private sector, according MPC, are promotion of credit intermediation as well as well as improved business environment
The MPC maintained the decision of expanding money supply in July and August 2021, the statement added.