Central bank keen on low inflation

KEEPING low and stable inflation rate is the major focus in implementing the monetary policy, the Bank of Tanzania (BoT) Deputy Governor, Administration and Internal Controls, Mr Juma Reli has said.

'We want to avoid fluctuations of the inflation rate and BoT has successfully managed to make it stable,' he told a seminar in Bagamoyo, Coast Region recently.

Tanzania inflation rate has for almost a year remained at an average of 6 per cent, which is also below the Gross Domestic Product (GDP) growth rate of 7 per cent.

Also, Mr Reli said BoT was committed to ensuring the country attain sound monetary policy. The BoT has put in place regulatory framework not for controls but to ensure inflation is low and stable, a necessary aspect for attracting Foreign Direct Investments into the country.

According to analysts, maintaining low and stable inflation is crucial in paving the economic growth and political stabilisation of a country.

Therefore maintaining it at an acceptable level is critical. Also, the attainment of low inflation will depend not only on coordination of monetary and fiscal policies, but also deliberate policies that will address supply side challenges.

The supply side challenges include increased capacity of food production and stabilisation of food supply. For Dr Suleiman Missango, a senior BoT economist, 'Inflation is good to a country if it is low and stable without volatility.'

He said Tanzania is sailing smoothly in maintaining reasonable level of inflation an important milestone in attaining robust economic growth.

He cited the recent economic development achieved as the GDP at 7 per cent, inflation rate at an average 6 per cent and fiscal deficit at 4.5 per cent of GDP.

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