DAR ES SALAAM, July 8 -- A debate has emerged following the Bank of Tanzanias (BoT) decision to cut its benchmark Central Bank Rate (CBR) by 25 basis points to 5.75 per cent, a move the central bank said was necessary to sustain economic momentum in the face of stable inflation and rising liquidity needs.

The BoT said inflation has consistently remained within its target range of 3.0 to 5.0 per cent and is projected to stay stable, creating room to ease without risking price instability. BoT Governor Emmanuel Tutuba said the reduction was also timed to align with the harvest season, when demand for liquidity typically rises.

“We conducted an assessment and found we are entering the harvest season, when public demand for money is h...