Morocco’s central bank cut its borrowing rate to 2.75% from 3% as inflation drops thanks to lowering food prices and easing external inflationary pressures, Bank Al-Maghrib (BAM) said on Tuesday.
“After keeping the key rate unchanged for four consecutive meetings, the Board decided to lower it by 25 basis points to 2.75 percent”, the Rabat-based central bank pointed out in a statement following its Board’s 2nd quarterly meeting of 2024.
The Board explained the decision by the fact that the calibrated tightening of monetary policy, the regular monitoring of the transmission of its decisions and the measures rolled out by the Government to support household purchasing power and some economic activities allowed for considerable progress in steering inflation back to levels consistent with the price stability objective and in maintaining the post-covid recovery.
The Board noted that it will, however, continue to closely monitor economic conditions and inflation both at the national and international level.
Inflation is expected to drop to 1.5% in 2024, compared with 6.1% in 2023 and 6.6% in 2022, mainly driven by easing external pressures and lower prices of volatile food products.
Consecutive droughts have reduced Morocco’s cereals output weighing on overall economic growth, which the bank expects to drop to 2.8% this year, after 3.4% last year, before accelerating to 4.5 % in 2025.