RABAT, June 19 (Reuters)
RABAT, June 19 (Reuters)
Morocco’s central bank kept its benchmark lending rate at 3 percent on Tuesday, the level it has held since March when it cut rates to shore up an economy hit by bad weather and the euro zone crisis.
“(Since) the balance of risks is broadly neutral and the central inflation forecast is permanently consistent with the price stability objective, the (central bank’s) Board decided to keep the key rate unchanged at 3 percent,” the central bank said in a statement.
The central bank said on Tuesday that it expects inflation to average 1.4 percent in 2012, rising from less than 1 percent in 2011.
It also maintained its economic growth forecast for 2012 on Tuesday of below 3 percent, lower than the finance ministry’s already reduced 3.4 percent growth forecast. The $100 billion economy grew by close to 5 percent in 2011.
“Growth will be a little below 3 percent,” central bank Governor Abdellatif Jouahri later told reporters.
Apart from the 25 basis point rate cut in March this year, the central bank has left interest rates unchanged for the past three years.
However, it is suffering from the impact of drought and the economic slowdown in the European Union, its main trading partner. Europe is the main source of tourists in Morocco and of money transfers from the 2 million Moroccan migrants who live in Europe.
“(Growth in) savings and transfers of Moroccan migrants is losing speed … Their growth fell from 8 percent in May, 2011 to 2 percent in May, 2012,” Jouahri said.
Tourism receipts fell 0.2 percent last month, he said. A year ago they rose by 13 percent.
Anxious to avoid the kind of unrest seen in other parts of the Arab world and worried about increases in global commodity prices, Rabat last year raised public sector wages and has more than trebled funds for food and energy subsidies to over $6 billion.
Morocco ended 2011 with fiscal and external deficits slightly above 6 percent of gross domestic product.
Jouahri said he expects the budget deficit to stand at 5 percent of GDP at the end of this year in line with the finance ministry’s objective.
