Executive Summary
Tanzania's financial markets in May 2026 reflected ample banking-system liquidity and a Bank of Tanzania holding steady on policy amid a difficult external backdrop shaped by the Middle East conflict and elevated oil prices. Headline inflation edged up to 4.2 percent, staying comfortably inside the national, EAC and SADC convergence bands, while the Bank held its Central Bank Rate at 5.75 percent for a third consecutive quarter. The Government securities market saw short-term paper heavily oversubscribed even as yields continued to ease, while the interbank cash market saw lower turnover and softer rates — both consistent with comfortable bank liquidity positions.
- Government securities market: Two Treasury bills auctions (combined tender TZS 498.1bn) attracted bids of TZS 1,330.3bn — over 2.6x oversubscribed — while 15- and 20-year Treasury bonds drew TZS 324.9bn in bids against a TZS 401.8bn tender, pointing to soft demand at the long end even as short-term yields fell.
- Interbank cash market (IBCM): Total transactions eased to TZS 1,732.7bn from TZS 2,567.8bn in April, with 7-day tenor transactions dominating at 63.8% of volume; the overall IBCM rate slipped to 6.14% from 6.26%, tracking comfortably within the Bank's policy corridor.
- Monetary policy transmission: The narrowed ±150bps CBR corridor is working as intended — the 7-day IBCM rate averaged 5.92% in May, staying tightly anchored around the 5.75% policy rate.
- Exchange rate: The shilling depreciated marginally month-on-month to an average of TZS 2,616.88/USD in May 2026, but strengthened by 3.02% on an annual basis — a reversal from the 3.82% depreciation recorded a year earlier.
What's Next for Tanzania's Economy? The Policy Gaps Keeping $1 Trillion Out of Reach by 2050
Before diving into the market data below, read TICGL's flagship analysis on the structural and policy gaps standing between Tanzania and its Vision 2050 ambitions — essential context for interpreting this month's monetary, fiscal and market developments.
Read the Full Analysis →1. Inflation Developments
Headline inflation rose to 4.2 percent in May 2026, from 4.0 percent in April 2026 and 3.2 percent a year earlier, remaining within the national target band and the SADC/EAC convergence benchmarks. The increase was driven mainly by the pass-through of elevated global fuel prices to transport costs — transport inflation jumped to 11.9 percent in May from 9.2 percent in April. Core inflation (excluding unprocessed food and energy) rose to 3.4 percent, remaining the principal contributor to headline inflation at 2.6 percentage points. Food inflation eased marginally to 5.6 percent as staple crop prices stabilised, while energy, fuel and utilities inflation moderated to 5.0 percent even though retail pump prices stayed elevated on Gulf-conflict disruption to global oil markets.
Chart 1: Tanzania Inflation Trend — Headline, Food, Energy & Core (Jan 2025 – May 2026)
| Main Group | Weight (%) | May-25 | Apr-26 | May-26 |
|---|---|---|---|---|
| All items (headline inflation) | 100.0 | 3.2 | 4.0 | 4.2 |
| Food and non-alcoholic beverages | 28.2 | 5.6 | 5.7 | 5.6 |
| Core inflation | 73.9 | 2.1 | 3.1 | 3.4 |
| Non-core inflation | 26.1 | 5.6 | 6.3 | 6.3 |
| Energy, fuel and utilities | 5.7 | 6.1 | 5.3 | 5.0 |
| Transport | 14.1 | 1.7 | 9.2 | 11.9 |
| Housing, water, electricity, gas & other fuels | 15.1 | 3.4 | 1.7 | 0.7 |
| Services | 37.2 | 1.0 | 4.0 | 4.7 |
| Goods | 62.8 | 4.2 | 4.0 | 4.0 |
2. Monetary Policy Stance
At its April 2026 meeting, the Monetary Policy Committee (MPC) maintained the Central Bank Rate (CBR) at 5.75 percent for the quarter ending June 2026, balancing inflation and growth risks amid heightened Middle East geopolitical tensions. The CBR corridor was narrowed to ±150 basis points (from ±200bps) to sharpen policy transmission. The 7-day interbank cash market rate averaged 5.92 percent in May — comfortably inside the corridor — confirming effective transmission of the policy signal. The Bank continued to inject liquidity mainly via reverse repo operations, with sales rising to TZS 399.5 billion in May from TZS 379.7 billion in April, underscoring an accommodative posture in support of credit growth.
Chart 2: Extended Broad Money (M3) & Private Sector Credit — Outstanding Stock
Chart 3: Brent Crude Oil Price — Monthly Average (USD/barrel)
3. Financial Markets Deep Dive: Government Securities & Interbank Cash Market
This section is TICGL's primary focus for the June 2026 review cycle: a detailed look at the two markets that most directly signal domestic liquidity conditions and the cost of government borrowing — the Government securities market (Treasury bills and bonds) and the Interbank cash market (IBCM).
3.1 Government Securities Market
In May 2026, the Government securities market performed satisfactorily. Short-term securities registered high oversubscription, more than offsetting undersubscription at the longer end of the yield curve, in line with adequate liquidity in the banking system.
| Instrument | Tender Size (TZS bn) | Bids Received (TZS bn) | Successful (TZS bn) | Subscription Rate | Weighted Avg. Yield |
|---|---|---|---|---|---|
| Treasury Bills (combined, 2 auctions) | 498.1 | 1,330.3 | 499.8 | 267% | 4.74% (from 5.06% in Apr-26) |
| Treasury Bonds — 15-year | 165.5 | 324.9 (combined) | 235.1 (combined) | 81% (combined) | 10.39% |
| Treasury Bonds — 20-year | 236.3 | — | — | — | 10.43% |
Chart 4: Treasury Bills Yields by Tenor (Weighted Average Yield, %) — Mar 2025 to May 2026
Chart 5: Treasury Bonds Yield to Maturity by Tenor (%) — Mar 2025 to May 2026
Chart 6: Tanzania Government Securities Yield Curve — Snapshot, May 2026
| Tenor | May-25 | Sep-25 | Jan-26 | Mar-26 | Apr-26 | May-26 |
|---|---|---|---|---|---|---|
| 35-day T-bill | 6.50 | 6.20 | 5.36 | 4.20 | 3.81 | 3.23 |
| 91-day T-bill | 7.50 | 6.81 | 5.73 | 4.23 | 4.02 | 3.78 |
| 182-day T-bill | 8.24 | 6.56 | 5.85 | 5.69 | 5.46 | 5.23 |
| 364-day T-bill | 8.92 | 5.99 | 6.21 | 5.80 | 5.72 | 5.63 |
| Overall T-bills rate | 8.89 | 6.03 | 5.89 | 5.21 | 5.06 | 4.74 |
| 2-year bond | 12.08 | 12.17 | 10.05 | 8.36 | 8.36 | 8.36 |
| 5-year bond | 12.94 | 12.48 | 10.54 | 10.54 | 9.54 | 9.54 |
| 10-year bond | 14.26 | 13.74 | 11.30 | 11.30 | 9.40 | 9.40 |
| 15-year bond | 14.63 | 13.91 | 12.08 | 10.78 | 10.78 | 10.39 |
| 20-year bond | 15.11 | 13.55 | 12.02 | 10.71 | 10.71 | 10.43 |
| 25-year bond | 15.29 | 13.19 | 13.19 | 11.99 | 11.99 | 11.99 |
3.2 Interbank Cash Market (IBCM)
The Interbank Cash Market continued to facilitate liquidity distribution among banks, with total market transactions of TZS 1,732.7 billion in May 2026, down from TZS 2,567.8 billion in April. Transactions with a 7-day maturity continued to dominate, accounting for 63.8 percent of total volume. The overall IBCM rate eased slightly to 6.14 percent from 6.26 percent in April 2026, tracking within the Bank's ±150bps CBR corridor and confirming smooth policy transmission.
Chart 7: Interbank Cash Market Rates — Overnight, 2–7 Day & Overall (%) — Mar 2025 to May 2026
Chart 8: IBCM Total Transactions vs. Reverse Repo Sold (TZS bn) — Apr vs May 2026
Chart 9: IBCM Volume Share by Maturity — May 2026
| Maturity | Mar-26 | Apr-26 | May-26 |
|---|---|---|---|
| Overnight | 6.17 | 6.15 | 5.94 |
| 2 to 7 days | 6.25 | 6.18 | 5.96 |
| 8 to 14 days | 6.53 | 6.33 | 6.48 |
| 15 to 30 days | 6.85 | 6.79 | 6.58 |
| 31 to 60 days | 7.20 | 6.92 | 6.79 |
| 61 to 90 days | 8.50 | 7.12 | 6.79 |
| 91 to 180 days | 8.07 | 8.77 | 7.27 |
| Overall IBCM rate | 6.32 | 6.26 | 6.14 |
| Period | Reverse Repo Sold |
|---|---|
| April 2026 | 379.7 |
| May 2026 | 399.5 |
3.3 Interbank Foreign Exchange Market (IFEM)
Liquidity conditions in the IFEM remained adequate in May 2026, supported by seasonal currency inflows, particularly from gold exports. Total market turnover rose to USD 119.3 million from USD 64.6 million in April, and the Bank intervened by auctioning USD 44 million (up from USD 15.3 million), in line with its Foreign Exchange Intervention Policy. Despite higher forex liquidity, the shilling depreciated marginally month-on-month, trading at an average of TZS 2,616.88/USD versus TZS 2,612.46/USD in April — though it strengthened 3.02% on an annual basis, a turnaround from 3.82% annual depreciation a year earlier.
Chart 10: TZS/USD Exchange Rate — End of Period, May 2025 to May 2026
| Indicator | Apr-26 | May-26 |
|---|---|---|
| Total market turnover (USD million) | 64.6 | 119.3 |
| BOT net auction/sale (USD million) | 15.3 | 44.0 |
| Weighted average exchange rate (TZS/USD) | 2,612.46 | 2,616.88 |
Muhtasari kwa Kiswahili
Ripoti ya Kila Mwezi ya Kiuchumi ya Benki Kuu ya Tanzania (BOT) ya Juni 2026 inaonesha kuwa mfumuko wa bei nchini Tanzania uliongezeka hadi asilimia 4.2 mwezi Mei 2026, kutoka asilimia 4.0 mwezi Aprili, ukisukumwa hasa na ongezeko la bei za mafuta duniani kufuatia mgogoro wa Mashariki ya Kati. Hata hivyo, kiwango hicho bado kiko ndani ya lengo la Taifa na vigezo vya EAC na SADC.
- Sera ya fedha: Benki Kuu iliendelea kutunza Kiwango cha Riba cha Benki Kuu (CBR) katika asilimia 5.75 kwa robo ya mwaka inayoishia Juni 2026.
- Soko la Hatifungani za Serikali: Dhamana za muda mfupi (Treasury bills) ziliendelea kupokelewa vizuri sana na wawekezaji (ombi la TZS bilioni 1,330.3 dhidi ya lengo la TZS bilioni 498.1), huku riba (yield) ikiendelea kushuka hadi wastani wa asilimia 4.74. Hatifungani za muda mrefu (miaka 15 na 20) zilipokea maombi kidogo zaidi ya lengo.
- Soko la Fedha baina ya Benki (Interbank Cash Market): Miamala ilipungua hadi TZS bilioni 1,732.7 kutoka TZS bilioni 2,567.8 mwezi Aprili, huku riba ya jumla ikishuka hadi asilimia 6.14. Miamala ya siku 7 iliendelea kutawala soko, ikichukua asilimia 63.8 ya miamala yote.
- Soko la Fedha za Kigeni baina ya Benki (IFEM): Mzunguko wa fedha za kigeni uliongezeka hadi Dola milioni 119.3 kutoka Dola milioni 64.6 mwezi Aprili, huku Shilingi ikishuka kidogo hadi wastani wa TZS 2,616.88 kwa Dola moja, lakini ikiimarika kwa asilimia 3.02 ukilinganisha na mwaka jana.
Kwa uchambuzi wa kina zaidi kuhusu mapengo ya kisera yanayozuia uchumi wa Tanzania kufikia thamani ya Dola trilioni 1 ifikapo 2050, soma makala maalum ya TICGL: What's Next for Tanzania's Economy?