Dar
es Salaam — The Bank of Tanzania has said it will continue to maintain
the accommodative monetary policy stance to stimulate the recovery of
growth of credit to private sector.
In its Monetary
Policy Statement (MPS) for February, the central bank said the policy
will also aim at supporting various economic activities.
According to a
statement, annual growth of credit to the private sector recovered to
1.7 per cent in December 2017, from the average contraction of about 1.5
per cent recorded in September and October 2017.
"The observed
growth, which is still below the recorded levels, reflects cautious
approach taken by banks in extending credit to the private sector in the
face of increasing non-performing loans, coupled with increased
preference for low risk government securities," says BoT statement.
It reads, in the
second half of 2017/18, the BoT will maintain the accommodative monetary
policy stance aiming at stimulating further the recovery of growth of
credit to the private sector and general support of various economic
activities.
Accommodative
monetary policy occurs when the central bank attempts to expand the
overall money supply to boost the economy when growth is slowing (as
measured by GDP).
"Using appropriate
monetary policy instrument mix, the bank will continue to closely
monitor and manage movements in banks' clearing balances in order to
instil stability of money market interest rates," says BoT statement.
The Bank says will
continue with liquidity easing policy stance for the remainder of the
2017/18, while maintaining stability of money market interest rates.
However, the growth
of money supply will be kept within a range consistent with the
medium-term inflation target of 5 per cent, and real GDP growth of about
7 per cent.
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