Loans will become less expensive for businesses and consumers, which may further stimulate investment and consumption, thereby helping to sustain growth. Contrary to market forecasts, Bank Al-Maghrib’s Board of Directors, meeting on Tuesday June 25, opted for monetary easing by lowering the key interest rate by 25 basis points to 2.75%.
This decision is based on several factors and aims to respond to the current dynamics of the Moroccan economy. Inflation has declined. After rates of 6.6% in 2022 and 6.1% in 2023, it has returned to low levels in recent months due to the easing of external pressures and lower prices for volatile food products. On the other hand, taking into account the resumption of the basic commodities subsidies removal process, forecasts indicate average inflation of 1.5% for the current year, and 2.7% in 2025. This offers scope for a more accommodating monetary policy.
Moreover, inflation expectations, as measured by Bank Al-Maghrib’s quarterly survey, have fallen significantly. Financial experts anticipate inflation of 2.7% over an eight-quarter horizon, reinforcing confidence in the control of future inflation.
Bank Al-Maghrib’s Board of Directors believes that previous monetary tightening decisions have stabilized bank lending rates and that these measures, combined with government action, have succeeded in bringing inflation down to a desired level, while supporting the economic recovery.
In its forecasts, the central bank expects growth to reach 2.8% this year, before accelerating to 4.5% in 2025. This would be due to a combination of buoyant non-agricultural activities and a possible recovery in the agricultural sector. Projections point to a strengthening of non-agricultural activities, with growth rates of 3.8% in 2024 and 4.1% in 2025. This growth is underpinned by several factors. These include infrastructure projects, with the various major projects that have been launched and are scheduled to be completed, the continuing momentum of tourism activities, and the consolidation of household consumption, boosted by lower inflation and wage increases. However, agricultural production remains dependent on climatic conditions, which introduces a great deal of uncertainty into forecasts.
Khadija MASMOUDI
