Tanzania's Interest Rate Decision for December 2025: Steady at 5.75%
Key Takeaways: Tanzania's central bank held the benchmark interest rate steady at 5.75% in December 2025, matching the previous reading and slightly above market expectations of 5.50%. This decision reflects a cautious stance amid stable inflation, moderate GDP growth, and external uncertainties. The move signals a balanced approach to supporting economic recovery while containing inflationary pressures.
Table of Contents
Tanzania's Interest Rate Decision for December 2025 maintained the policy rate at 5.75%, unchanged from November 2025 and consistent with the rate held since January 2025. This steady stance comes amid a backdrop of moderate economic growth, stable inflation near the central bank's target, and ongoing external pressures from global commodity markets and geopolitical risks.
Drivers this month
- Inflation steady at 3.8% in December vs. 3.9% in November, close to the 12-month average of 4.0%
- GDP growth estimated at 4.5% YoY for Q4 2025, slightly below the 4.7% average for the previous three quarters
- Stable exchange rate of TZS against USD, with minor volatility amid global market uncertainty
Policy pulse
The central bank’s decision to hold rates at 5.75% reflects a cautious approach, balancing the need to support economic recovery with the imperative to keep inflation anchored near the 5% target. The rate remains below the 6.0% level seen in early 2024, signaling a gradual easing trend over the past year.
Market lens
Following the announcement, the Tanzanian shilling (TZS) showed mild appreciation against the USD, while short-term government bond yields remained stable. Market participants interpreted the decision as a signal of policy continuity amid moderate inflation and external uncertainties.
Core macroeconomic indicators for December 2025 reveal a stable economic environment. Inflation held at 3.8% MoM, slightly below November’s 3.9%, and well within the central bank’s 3-5% target range. The 12-month average inflation rate stands at 4.0%, reflecting consistent price stability over the past year.
Inflation and growth
GDP growth estimates for Q4 2025 indicate a 4.5% YoY increase, a modest slowdown from the 4.7% average in the prior three quarters (Q1-Q3 2025). This deceleration is linked to softer agricultural output and subdued manufacturing activity. However, services and construction sectors showed resilience, supporting overall growth.
Monetary and fiscal policy
The central bank’s steady interest rate complements a fiscal policy focused on maintaining a manageable budget deficit, projected at 4.2% of GDP in December 2025, slightly improved from 4.5% in October 2025. Government spending remains targeted toward infrastructure and social programs, supporting medium-term growth prospects.
External environment
External shocks, including fluctuating commodity prices and geopolitical tensions in East Africa, continue to pose risks. Tanzania’s export revenues have been stable, but global demand uncertainties require cautious monitoring. The current account deficit narrowed slightly to 3.8% of GDP in December from 4.1% in November, aided by improved gold exports.
What This Chart Tells Us
The steady interest rate amid stable inflation and moderate growth signals a balanced monetary policy. The central bank appears focused on sustaining recovery without risking inflationary pressures, suggesting a cautious but supportive stance for the near term.
Market lens
Immediate reaction: The Tanzanian shilling (TZS) appreciated 0.3% against the USD within the first hour post-announcement, reflecting market approval of policy continuity. Short-term government bond yields remained flat, indicating stable financial conditions.
Looking ahead, Tanzania’s monetary policy faces a mix of upside and downside risks. Inflation is expected to remain within the 3-5% target range, supported by stable food prices and moderate wage growth. However, external shocks such as commodity price volatility and regional geopolitical tensions could pressure the shilling and inflation.
Bullish scenario (30% probability)
- Global commodity prices stabilize or improve, boosting export revenues
- Inflation remains subdued, allowing for gradual rate cuts in H2 2026
- GDP growth accelerates above 5%, driven by investment and services
Base scenario (50% probability)
- Inflation holds steady near 4%, with moderate GDP growth around 4.5%
- Monetary policy remains on hold through mid-2026
- Fiscal discipline continues, supporting macro stability
Bearish scenario (20% probability)
- External shocks push inflation above 5%, forcing rate hikes
- Currency depreciation pressures import prices and inflation
- GDP growth slows below 4%, impacted by weaker exports
Tanzania’s decision to maintain the interest rate at 5.75% in December 2025 reflects a prudent approach amid a stable but cautious economic environment. The central bank balances supporting growth with anchoring inflation, mindful of external risks and fiscal dynamics. Market reactions suggest confidence in policy continuity, but vigilance remains essential given global uncertainties.
Continued monitoring of inflation trends, fiscal discipline, and external developments will be critical to navigating the year ahead. Tanzania’s macroeconomic fundamentals remain solid, but the interplay of domestic and external factors will shape monetary policy decisions in 2026.
Key Markets Likely to React to Interest Rate Decision
The Tanzanian interest rate decision typically influences several key markets, including local currency, government bonds, and regional equities. The Tanzanian shilling (TZS) often reacts to policy signals, while bond yields adjust to expectations of future rate moves. Regional stock indices and select commodities linked to Tanzania’s export profile also show sensitivity to monetary policy shifts.
- TZSUZUSD – Tanzanian shilling vs. US dollar, directly impacted by interest rate changes.
- DSE – Dar es Salaam Stock Exchange, sensitive to macroeconomic and monetary policy shifts.
- USDTZS – USD/TZS currency pair, reflecting exchange rate volatility post-decision.
- BTCTZS – Bitcoin priced in Tanzanian shilling, often influenced by currency stability.
- NSE – Nairobi Securities Exchange, regional equity market affected by East African economic trends.
Insight Box: Since 2020, the TZSUZUSD currency pair has shown a strong inverse correlation with Tanzania’s interest rate decisions. Periods of rate hikes have coincided with TZS appreciation, while rate cuts or holds amid inflationary pressures have led to depreciation. This dynamic underscores the critical role of monetary policy in stabilizing the currency and managing inflation expectations.
Frequently Asked Questions
- What was Tanzania's interest rate decision for December 2025?
- Tanzania's central bank held the interest rate steady at 5.75% in December 2025, unchanged from November.
- How does the December 2025 rate compare to previous months?
- The 5.75% rate matches November 2025 and is slightly below the 6.0% level maintained throughout most of 2024.
- What are the main risks facing Tanzania's monetary policy in 2026?
- Key risks include external shocks such as commodity price volatility, geopolitical tensions, and potential inflationary pressures from currency depreciation.
Takeaway: Tanzania’s steady interest rate at 5.75% in December 2025 signals a cautious but balanced monetary policy, aiming to sustain growth while anchoring inflation amid external uncertainties.
Updated 1/8/26
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The interest rate held steady at 5.75% in December 2025, matching November's 5.75% and below the 12-month average of 5.85%. This stability contrasts with the 6.0% rate maintained throughout most of 2024, reflecting a gradual easing trend over the past year.
Inflation's slight dip to 3.8% in December from 3.9% in November supports the central bank’s decision to maintain rates. Meanwhile, GDP growth's modest slowdown to 4.5% YoY in Q4 2025 from 4.7% in prior quarters suggests a cautious economic environment.