Tanzania’s central bank on Friday set its main interest rate at 5.5 per cent in a bid to contain inflation within its target and boost economic growth.

The announcement is the first by the Bank of Tanzania since it said earlier this month that it would start using a benchmark interest rate to signal its monetary policy direction.

“The… decision on the CBR (Central Bank Rate) considered the need to contain inflation within the medium-term target of 5 per cent, while supporting economic growth to reach 5.5 per cent or more in 2024,” central bank governor Emmanuel Tutuba said at a press conference.

Inflation in the East African nation fell to 3 per cent in December from 3.2 per cent in November.

Tutuba said the decision by the bank’s Monetary Policy Committee was also aimed at ensuring the stability of the exchange rate, adding the new rate does not involve capping interest rates on facilities offered by other institutions.

“Interest rates of facilities offered by banks and financial institutions will still be market-determined,” he said.

• A Reuters report