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TanzaniaThe Path to Prosperity$
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Christopher S. Adam, Paul Collier, and Benno Ndulu

Print publication date: 2017

Print ISBN-13: 9780198704812

Published to Oxford Scholarship Online: January 2017

DOI: 10.1093/acprof:oso/9780198704812.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 02 March 2021

Monetary Policy in Tanzania

Monetary Policy in Tanzania

Accomplishments and the Road Ahead

Chapter:
(p.241) 11 Monetary Policy in Tanzania
Source:
Tanzania
Author(s):

Pantaleo J. Kessy

Stephen A. O’Connell

Johnson Nyella

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198704812.003.0011

The Bank of Tanzania (BoT) is on the cusp of a transition from monetary aggregates to interest rates as the operational target of monetary policy. Placing this transition in historical perspective, this chapter emphasizes the conquest of fiscal dominance as a crucial precondition for the emergence of an independent monetary policy in the mid-1990s. It documents the success of reserve-money programming over the ensuing two decades and addresses the emerging limitations of this approach as a framework for constrained discretion. Looking ahead, it argues that a policy-rate system can improve the transparency of monetary policy and strengthen the BoT’s leverage over inflation. Greater stability in short-term interest rates will also enhance the development of the financial sector, a key secondary objective of monetary policy in Tanzania.

Keywords:   Tanzania, fiscal dominance, inflation, reserve-money programming, operational target

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