Bank Al-Maghrib (BAM), Morocco’s central bank, decided to cut its key interest rate by 25 basis points to 2.50% on Tuesday, as inflation remains well within target, according to a statement on Tuesday following their quarterly meeting.
The rate cut follows its previous reduction in June. Bank Al-Maghrib’s move comes as inflation in Morocco continues to decelerate sharply, from an annual average of 6.1% in 2023 to just 1% this year, with projections pointing to moderate levels of 2.4% in 2025 and 1.8% by 2026.
“Given that inflation evolves at levels in line with the price stability objective and considering the high uncertainty surrounding the medium-term outlook, particularly at the international level, the Board decided to reduce the key rate by 25 basis points to 2.50%,” the central bank said in a statement.
Bank Al-Maghrib’s latest projections suggest that Morocco’s economic activity will pick up in the coming years. Non-agricultural growth is expected to remain steady at 3.5% in 2024 before accelerating to 3.6% in 2025 and 3.9% in 2026.
Agricultural output, which remains weather-dependent, is projected to recover from a 4.6% contraction this year to 5.7% growth in 2025, assuming favorable harvest conditions.
“Inflation expectations remain well anchored,” the statement added, citing its quarterly survey of financial experts, which anticipates average inflation of 2.3% over the next eight quarters.