BoT holds key rate at 5.75 pc amid strong economic growth outlook

Tutuba said that the decision aligns with inflation projections, which are expected to remain within the target range of 3–5 percent.

He also noted that economic growth remains robust, supported by active business activity and stable macroeconomic fundamentals.

“The decision to keep the CBR unchanged reflects positive developments in both domestic and global environments. Inflation is stable, growth across sectors is resilient, and global conditions are broadly supportive,” Mr Tutuba explained.

Recent data confirm that the economy is on track. Mainland Tanzania’s GDP grew by 5.4 percent in the first quarter of 2025, up from 5.2 percent during the same period last year.

This growth was driven by the mining, agriculture, financial services, and manufacturing sectors. Zanzibar's economy experienced even stronger growth at 6.4 percent for the same period.

Growth momentum is expected to continue, with forecasts suggesting an expansion of above 6 percent in both the second and third quarters, maintaining a similar pace in the fourth quarter.

Overall, the economy is projected to grow by 7.3 percent in 2025, largely propelled by the tourism, construction, and agriculture sectors.

In August 2025, inflation in Mainland Tanzania was recorded at 3.4 percent, well within the target range. Zanzibar saw a slight decrease to 4.0 percent, down from 4.2 percent, attributed to lower food prices.

“Both regions are expected to keep inflation below 5 percent, supported by stable food supplies, favorable exchange rates, and moderate oil prices,” he mentioned.

The banking sector remains resilient, with improved liquidity and a reduction in non-performing loans to 3.3 percent by August 2025.

Private sector credit growth stood at approximately 16 percent, reflecting investor confidence and a stronger liquidity environment, supported by solid capitalization and profitability.

Mr Tutuba remarked that both advanced and emerging economies have shown resilience despite geopolitical tensions and trade challenges. While global growth has slowed, inflation has eased in many countries, prompting central banks to either maintain or reduce policy rates.

Commodity prices continue to be significant, with oil averaging $68 per barrel and gold trading at $3,354.1 per troy ounce.

Domestically, the Tanzanian shilling appreciated by 8.4 percent against the US dollar, supported by increased export earnings from gold, tourism, and traditional crops. Foreign exchange reserves rose to $6.4 billion, covering more than five months of imports.

On the fiscal front, Mr Tutuba noted that the government is managing finances prudently, with domestic revenue surpassing targets due to strong tax collection.

 Expenditures align with resources, and public debt remains stable, with strategic infrastructure projects continuing to promote growth.

The current account deficit narrowed to 2.4 percent of GDP in the year ending September 2025, down from 3.8 percent a year earlier.

“This improvement reflects increased export earnings, particularly from agriculture and tourism. Zanzibar also posted a surplus of $685.6 million, primarily driven by tourism,” he stated.

Mr Theobald Sabi, Managing Director of NBC Bank and Chairman of the Tanzania Bankers Association, praised the report, emphasizing that the reduction in the current account deficit and the strong performance in agriculture, mining, and tourism demonstrate the economy’s resilience.

He added that the strength of the financial sector and the stability of foreign reserves highlight Tanzania’s ability to navigate global uncertainties.