The Bank of Tanzania (BoT) is set to shift to an interest rate-based monetary policy framework that focuses on interest rate, effective from January 2024 as part of its efforts to improve the effectiveness of the monetary policy.
Currently, the Central Bank conducts a monetary policy which targets money supply.
The interest rate-based framework started to be used by countries in 1990 and currently it is used by 45 central banks around the world.
According to a statement issued by the BoT Governor Emmanuel Tutuba this week, 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.
“To ensure smooth and effective implementation of the new monetary policy framework, the Bank of Tanzania has prepared the Operational Guidelines for Interest Rate-Based Monetary Policy Framework,” the statement said.
It added, “These Guidelines aim at providing necessary information to stakeholders to understand the monetary policy objectives, processes and procedures involved. Therefore, the Guidelines will help to provide clarity on the manner in which the monetary policy will be formulated and implemented, assist stakeholders to plan for their operations and enhance transparency and accountability in the conduct of monetary policy”
The statement said the Bank of Tanzania will continue to engage stakeholders to foster a deeper understanding of the new monetary policy framework with ultimate goal of achieving price stability and supporting sustainable growth of the economy.
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