BoT to continue implementing a less accommodative monetary policy in March and April to control inflation below the target

The Monetary Policy Committee (MPC) has approved the Bank of Tanzania (BoT) to continue implementing less accommodative monetary policy in March and April 2023.

According to the latest Monetary Policy Committee Meeting statement, “the policy stance will help to control inflation below the target of 5.4 percent, while supporting credit growth to various economic activities,”

In addition, the policy stance will support the attainment of IMF ECF targets for the third quarter of 2022/23, which are set as indicative targets and laying foundation for achieving the performance criteria for June 2023.

“The Bank shall continue to support the broader macroeconomic objectives of the Governments, while closely monitoring the emerging risks from external shocks and take necessary measures when need arises,” part of the statement reads.

The MPC said that it is satisfied that the implementation of less accommodative monetary policy in January and February 2023 succeeded to contain inflation within the target, while supporting recovery of economic activities by maintaining adequate liquidity and strong credit intermediation to the private sector.

According to the latest Monetary Policy Committee Meeting Statement, “the policy stance also helped to cushion the economy from adverse global economic shocks and heightened commodity prices, while supporting the attainment of agreed benchmarks under the IMF Extended Credit Facility (ECF) arrangement,”

Regarding the recent economic performance, the MPC noted that, in 2022 the global economy was weakened by economic shocks and climate-related constraints.

“As a result, global growth is expected to slow in 2023, before rebounding in 2024.Commodity prices in the world market remained high in 2022, though trended downwards in the second half of the year. As a result, inflation has been declining since the last quarter of 2022, though remains above central bank targets in many countries, especially advanced economies,” the statement said.

The MPC further noted that the domestic economy is performing well with leading economic indicators suggesting positive outlook.

“Considering actual growth of 5.2 percent in the first three quarters of 2022 in Mainland Tanzania, it is likely that growth could be around 5 percent, which is higher than the projected growth of 4.7 percent for2022. The Zanzibar economy is estimated to grow at 5.4 percent in 2022, owing to implementation of ongoing initiatives to enhance the blue economy and the resumption of tourism,” the statement added.

The MPC projects higher growth for both economies in2023, reinforced by growth of credit to the private sector, improved business and investment conditions, rebounding of tourism activities, as well as prudent monetary and fiscal policies.