AfricaPress-Tanzania: THE Central Bank’s Monetary Policy Committee (MPC) has expressed concern over the sluggishness in the pace of reduction of interest rates charged by banks.
The MPC that met on Friday last week to review the performance of the economy called upon the BoT to devise ways of protecting consumers of financial services against the high interest rates charged by banks and financial institutions, as they have negative impact on growth, particularly of the private sector.
“While exhorting the BoT to continue with accommodative monetary policy in order to support growth of economic activities and safeguard the stability of the financial sector, the Committee calls upon BoT to devise ways of protecting consumers of financial services against the high interest rates charged by banks and financial institutions, as they have negative impact on growth, particularly of the private sector,” the statement said.
Recently, the BoT lowered its benchmark interest rate and reserve requirement to cushion the economy from adverse effects of Coronavirus and provide additional liquidity to banks, safeguard stability of the financial sector, and facilitate the financial intermediation process.
The Bank also lowered the discount rate to 5.0 per cent, providing additional space for banks to borrow at a lower cost and thus signaling lower lending rates.
The Statutory Minimum Reserves (SMR), requirement was cut 100 basis points to 6.0 percent, as of last month while the haircut on government securities was lowered to 5.0 per cent from 10 per cent for government securities and to 20 per cent from 40 per cent for Treasury bonds.
The Monetary policy consists of decisions and actions taken by the BoT to ensure that the supply of money in the economy is consistent with growth and price objectives set by the government.
The MPC of the Board of Governors of the Bank which is chaired by the Governor is responsible for setting the monetary policy direction bi-monthly, in line with the targets set in the Monetary Policy Statement.
The MPC observed that despite the impact of Covid-19 on some few sectors, such as tourism and entertainment, the economy performed satisfactorily.
