Bank Al Maghrib sees no need to intervene in the economy and is keeping the key interest rate constant at 2.75%. Inflation is expected to fall to an average of 1.3% in 2024.
Rabat – Today’s meeting of the Board of Directors of the Moroccan Central Bank was awaited with some excitement. Just a few days before, there was a lot of speculation among experts and the media. The question was whether the Bank Al Maghrib would follow the example of the US central bank, the Fed, and also lower the key interest rate, given stable inflation with a falling trend and high foreign exchange earnings due to growth in tourism and record remittances from Moroccans living abroad (MRE). On September 18, the Fed cut the key interest rate by half a percentage point, which led to price increases on the major stock exchanges and could boost investment ahead of the elections in the USA. Moroccan investors had also hoped that loans could become cheaper for them.
Economic development continues to be burdened by concerns in agriculture.
The Board of Bank Al Maghrib held its third quarterly meeting of 2024 today, Tuesday, September 24. During this meeting, it analyzed the evolution of the national and international economic situation, as well as Bank Al Maghrib’s medium-term macroeconomic projections. It decided to keep the key interest rate unchanged at 2.75%, while continuing to closely monitor economic and social developments.
International economic activity proved relatively resilient, but is expected to slow in many advanced and emerging economies over the forecast horizon, mainly due to tight monetary conditions. Inflation continued its downward trend, but prices for services in the main advanced economies will continue to rise, the central bank said in its assessment.
At the national level, although agricultural production remains largely weather-dependent, the available intra-year data would overall point to a further recovery in non-agricultural activities, a trend that, in the view of Moroccan central bankers, should be supported in the medium term by the expected dynamism of public and private investment.
Increases in food prices and core inflation show declining trends
Inflation has been at a moderate level since the beginning of the year, mainly due to the decline in food prices with volatile prices and the slowdown in core inflation. Core inflation, which was 5.6% in 2023, is now fluctuating around 2% and will remain stable near this rate for the next eight quarters, according to Bank Al Maghrib’s forecasts.
Taking into account the announced changes in basic commodity price subsidies and assuming limited volatility in food prices over the medium term, headline inflation is expected to slow from 6.1% in 2023 to 1.3% this year before accelerating to 2.5% by 2025, according to Bank Al Maghrib’s assessment.
Morocco – Central Bank provides an overview of the current economic situation and an outlook for 2025.
