Rabat – Morocco’s central bank, Bank Al-Maghrib, announced a 25 basis point reduction in its benchmark interest rate to 2.75%, the first change in over a year, as inflation shows signs of easing.
The decision, unveiled following the bank’s quarterly meeting on Tuesday, comes as domestic inflation nears the target rate of 2%.
Benchmark interest rates dictate borrowing costs for financial institutions, with higher rates typically translating to more expensive loans for consumers. Central banks often raise rates to curb inflation.
“After reaching 6.6% in 2022 and 6.1% in 2023, domestic inflation has returned to low levels in recent months,” the bank said in a statement.
The decline in inflation is attributed to easing external pressures and lower prices of volatile food commodities. The bank forecasts inflation to average 1.5% by year-end.
The government’s controversial plan to remove state subsidies on basic food and energy commodities is expected to further reduce inflation.
Looking ahead, the central bank anticipates global inflation to decelerate from 4.7% in 2023 to 3.5% in 2024, and then to 3.1% in 2025.
In Morocco, inflation is projected to peak at 2.7% in 2025, influenced by external pressures from the ongoing conflict in Ukraine and the fallout from the Middle East crisis.
Inflation in the Euro area is expected to decline from 5.4% to 2.5% and then 2.2%, while in the USA, it is projected to drop from 4.1% to 3.3% and then 2.7%.
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