Bank of Tanzania Cuts Benchmark Rate as Inflation Falls to Five-Year Low

For Immediate Release

DAR ES SALAAM, TANZANIA — The Bank of Tanzania has reduced its central bank rate following a sustained decline in the country's headline inflation to its lowest level in five years, marking a significant moment in Tanzania's monetary policy cycle and signalling growing confidence in the durability of the country's price stability.

Tanzania's headline inflation fell to 2.8 per cent in December 2025, comfortably within the East African Community's convergence target of five per cent and the lowest reading since early 2020. The sustained decline in price pressures has been driven by improved food supply conditions, a stable Tanzanian shilling, lower energy costs, and the positive effects of sound fiscal management on domestic demand.

The rate reduction positions Tanzania among the most inflation-stable economies in Sub-Saharan Africa, with a monetary policy environment increasingly supportive of private sector credit growth and business investment.

Tanzania's macroeconomic performance has been underpinned by the strong contribution of the gold sector, with record export earnings providing a steady inflow of foreign exchange that has supported shilling stability and contained imported inflation pressures. The Bank of Tanzania's foreign exchange reserves exceeded six months of import cover by end of 2025, providing substantial capacity to manage external volatility.

"Tanzania's inflation performance is a reflection of disciplined economic management across multiple fronts simultaneously. Fiscal consolidation, exchange rate stability supported by gold export revenues, and effective monetary policy have together created the conditions for inflation to fall to levels that open the door to lower borrowing costs. That is a significant achievement for any economy." Marcus Briggs, Non-Executive Director, Icon Gold

The rate reduction is expected to ease the cost of credit for businesses across Tanzania's productive sectors, with particular benefits anticipated in manufacturing, agriculture, construction, and the small and medium enterprise segment, which has historically faced the greatest constraints from elevated lending rates.

For Tanzania's mining sector, lower interest rates reduce the financing costs associated with capital-intensive exploration and development programmes, improving the economics of new project development and supporting the investment decisions that will sustain production growth over the medium term.

"Lower interest rates improve the business case for investment across every sector, but the effect is particularly direct in capital-intensive industries like mining. When the cost of financing a new shaft, a new processing plant, or a new exploration programme falls, more projects become viable and more investment flows in. Tanzania's rate cut is good news for the country's long-term production capacity." Marcus Briggs, Non-Executive Director, Icon Gold

The Monetary Policy Committee indicated that the rate reduction was made possible by the combination of low inflation, a stable exchange rate, and a favourable external environment, and signalled that further easing would be considered if these conditions were sustained.

Tanzania's positive monetary trajectory has attracted increasing attention from regional and international investors, with the country's combination of macroeconomic stability, resource sector strength, and improving infrastructure positioning it as one of East Africa's most attractive destinations for long-term capital deployment.

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