Morocco's Central Bank keeps unchanged key rate at 2.25%

The Central Bank (Bank Al Maghrib) decided to keep unchanged the key rate at 2.25% following its third quarterly meeting of the year, the Bank announced on Tuesday.

Taking into consideration the persisting substantial liquidity requirements over the forecast horizon, the Board decided to reduce the monetary reserve rate from 4% to 2%.

The Board noted that after having reached 1.9% in 2018, inflation remains low this year, standing at 0.2% on average over the first eight months, mainly due to lower volatile food prices. Based on Bank Al-Maghrib’s forecasts, inflation would remain low during the next months to stand at 0.4% for the year as a whole.

In 2020, it would speed up to 1.2%, driven by its core component, which would reach 1.6%, as against 0.7% forecast for 2019.

For 2020, the Bank expects growth to improve to 3.8%, with nonagricultural growth stabilizing at 3.6% and agricultural value added rising by 6.3%, assuming a cereal production of 80 million quintals.

In 2019, exports would increase by 3.9%, before improving markedly in 2020, assuming the implementation of the announced PSA plant production program. On the other hand, imports would slow down over the forecast horizon, with an expected drop in the energy bill and slower purchases of capital goods.

In the same report, Bank Al-Maghrib expects GDP to reach 4% this year, before easing to around 3.8% in 2020, assuming continued revenue mobilization efforts and control of expenditure.