https://en.sputniknews.africa/20240104/tanzania-embraces-new-economic-management-approach-by-enabling-interest-rate-based-monetary-policy-1064460843.html
Tanzania Embraces New Economic Management Approach by Enabling Interest Rate-Based Monetary Policy
Tanzania Embraces New Economic Management Approach by Enabling Interest Rate-Based Monetary Policy
Sputnik Africa
The new monetary policy, which the Bank of Tanzania repeatedly announced over the past year, consists of decisions and actions taken by the Bank to influence... 04.01.2024, Sputnik Africa
2024-01-04T10:19+0100
2024-01-04T10:19+0100
2024-01-04T10:44+0100
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From January 2024, Tanzania adopts an interest rate-based monetary policy framework, meaning that instead of focusing primarily on controlling the amount of money in circulation, the Bank of Tanzania (BoT) will use interest rates as the primary tool to manage inflation and stimulate economic growth, the BoT said.Governor Emmanuel Tutuba emphasized that the new approach is expected to be more effective in maintaining stable and low prices, which will ultimately benefit consumers, businesses, and entrepreneurs alike.He also highlighted that this move aligns with Tanzania's commitment to regional economic cooperation and brings the country in line with other East African nations that have already adopted similar interest rate-based monetary policies.The centerpiece of the shift is the introduction of the Central Bank Rate (CBR), which is the key interest rate, that the BoT depends on to indicate whether it is tightening or loosening its grip on the economy. The BoT's role is to provide a benchmark in the form of the CBR, which will give a clear signal to financial institutions about the prevailing economic conditions, the BoT pointed out.Under the new framework, commercial banks will still retain the autonomy to set their own interest rates, guided by market forces, the BoT added.Tanzanian economists describing the new strategy noted that interest-based policies are used by major banks around the world and could lead to an influx of investment into the East African nation.
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economy, tanzania, east africa, bank, finance, east african community (eac), interest
economy, tanzania, east africa, bank, finance, east african community (eac), interest
Tanzania Embraces New Economic Management Approach by Enabling Interest Rate-Based Monetary Policy
10:19 04.01.2024 (Updated: 10:44 04.01.2024) The new monetary policy, which the Bank of Tanzania repeatedly announced over the past year, consists of decisions and actions taken by the Bank to influence the amount of money in the economy and the cost of borrowing.
From January 2024, Tanzania adopts an interest rate-based monetary policy framework, meaning that instead of focusing primarily on controlling the amount of money in circulation, the Bank of Tanzania (BoT) will use interest rates as the primary tool to manage inflation and stimulate economic growth, the BoT said.
Governor Emmanuel Tutuba emphasized that the new approach is expected to be more effective in maintaining stable and low prices, which will ultimately benefit consumers, businesses, and entrepreneurs alike.
He also highlighted that this move aligns with
Tanzania's commitment to regional economic cooperation and brings the country in line with other East African nations that have already adopted similar interest rate-based monetary policies.
"The framework is also in alignment with the country’s commitment to harmonizing monetary policy frameworks in the East African Community and other regional economic communities in which Tanzania is a member," the governor said.
The centerpiece of the shift is the introduction of the Central Bank Rate (CBR), which is the key interest rate, that the BoT depends on to indicate whether it is tightening or loosening its grip on the economy. The BoT's role is to provide a benchmark in the form of the CBR, which will give a clear signal to financial institutions about the prevailing economic conditions, the BoT pointed out.
Under the new framework, commercial banks
will still retain the autonomy to set their own interest rates, guided by market forces, the BoT added.
Tanzanian economists describing the new strategy noted that interest-based policies are used by major banks around the world and could lead to an influx of investment into the East African nation.
"By going the global way in monetary policy management, it will improve clarity and openness in Tanzania's financial markets and therefore attract more foreign investors into its markets," the economist Christopher Makombe told local media.
