The Board of Morocco’s central Bank, Bank Al-Maghrib (BAM), met on Tuesday in Rabat and decided to keep the benchmark interest rate steady at 3% while closely monitoring developments in Morocco’s economic circumstances and inflation, according to BAM’s news release.
The Board assessed that the current 3% benchmark rate remains appropriate to restrain inflation and facilitate inflation returning to levels in line with desired price stability.
Banks and financial organizations use benchmark interest rates to assess the cost of borrowing money. The rate determines the interest rates that banks provide to both consumers and companies.
BAM’s decision to keep interest rates steady comes as domestic inflation has been declining steadily over the last 12 months. After peaking at 10.1% in February 2023, inflation fell to 3.4% in December, yielding an annual average of 6.1% throughout 2023.
In terms of economic growth, the central bank expects that GDP growth will average 3% by the end of 2023, fall to 2.1% in 2024, but then accelerate to 4.3% in 2025.
Weather-related issues and weak investment are all predicted to contribute to the slowdown in economic development this year. Due to the ongoing drought, the acreage accessible for agriculture has decreased from 3.7 million hectares last year to only 2.5 million hectares this year.
Morocco’s cereal production, which is critical to the country’s food security, is expected to fall by almost 25 million quintals this year, from 55.1 million quintals in 2023.
Accordingly, agricultural value added is predicted to fall by 6.4% in 2024. However, a 12.8% recovery is expected in 2025 (assuming production returns to an annual average cereal crop of 55 million quintals).Meanwhile, non-agricultural activities are expected to rise from 2.6 percent in 2023 to 3% in 2024 and then 3.5% in 2025. BAM asserts that this growth is driven by anticipated investment momentum due to its numerous ongoing and future initiatives.