- It will have the Price-based Monetary Policy, which deals with interest rates to control inflation.
- That will be a departure from the Quantitative-based Monetary Policy currently being used. This involves increasing or reducing billions in the economy.
Dar es Salaam. Tanzania will have a new monetary policy to align itself with that of the East African Community before the region’s currency makes a debut.
It will have the Price-based Monetary Policy, which deals with interest rates to control inflation.
That will be a departure from the Quantitative-based Monetary Policy currently being used. This involves increasing or reducing billions in the economy.
The East African Monetary Union (Eamu) protocol was signed on November 30, 2013. It lays groundwork for a monetary union within 10 years and allows the EAC partner states to progressively converge their currencies into a single currency in the community.
In the run-up to achieving a single currency, the member states have to harmonise monetary and fiscal policies establish an East African Central Bank.
Bank of Tanzania senior economist Lusajo Mwankemwa told reporters here that the move comes in the wake of Eamu that requires all member states to shift the monetary policy before the common union takes off. Kenya has adopted the policy while Uganda has partially adopted it. According to him, the change is mainly attributed to technological cash transfer brought about by mobile money transfers.
The new monetary policy is expected to take off soon.
“Our country has taken a huge step in technology and is currently ranked among the top countries that have succeeded in financial inclusion through mobile money transfers…and therefore the majority of the citizens no longer move around with cash but store their money through mobile banks and therefore call for change in our system.”
He said the transmission mechanism challenge was no longer possible to control inflationary rates through the Quantitative-based Monetary Policy.