Morocco Keeps Interest Rates Unchanged Despite Macroeconomic Pressures

Despite rampant inflation, Morocco’s central bank, Bank Al-Maghrib (BAM), announced on Tuesday that it would be maintaining interest rates at 1.5%, going against intentional trends.

Rabat – Despite rampant inflation, Morocco’s central bank, Bank Al-Maghrib (BAM), announced on Tuesday that it would be maintaining interest rates at 1.5%, going against international trends.

Despite the lingering, COVID-induced economic disruptions and the spillover from the Ukraine war having triggered rising inflation, BAM opted not to increase interest rates to address rampant inflation.

The decision to maintain interest rates at the same level is an “accommodative stance of monetary policy,” BAM explained in a statement, adding that it aims to support national economic activities.

The Moroccan central bank believes that the prevailing inflationary pressure is of an exterior nature and is due to the international economic and geopolitical situation, the statement explained.

BAM forecasts indicate that inflation would likely wind off in 2023.

Echoing the international trends, consumer prices in Morocco will continue to increase in the near term, supported by rising inflation.

On the international front, sanctions on Russia’s imports and the rising demand from China’s recovering market are underlying the surge in energy and food prices, the bank explains.

Inflation is expected to reach an annual average of 5.3% in 2022.

However, the bank expects inflation to decelerate in the course of 2023, dropping to an annual average of 2%.

Assessing the overall performance of the national economy, the bank notes that the 69% decline in cereal input due to adverse weather is expected to bring agriculture’s added value down by 15% this year.

Nonagricultural activities would fare better supported by the easing of COVID-related restrictions. After a 3.8% growth this year, the bank expects Morocco’s non-agriculture activities to return to pre-pandemic levels in the course of 2023.

After a strong 7.9% rebound in 2021, Morocco’s national economy is expected to average an annual growth rate of 1% in 2022 before accelerating to 4% in 2023.