Rabat – An overwhelming majority of financial investors in Morocco are confident that Morocco’s central bank, Bank Al-Maghrib (BAM), will maintain the benchmark interest rate unchanged at 3%.
In a recent survey conducted by Attijari Global Research among 35 influential investors in the Moroccan financial market, a staggering 98% of respondents agreed with the scenario of the benchmark interest rate remaining unchanged.
Benchmark interest rates are a standard measure banks and financial institutions use to determine the cost of borrowing money. These rates influence the interest rates that banks offer to consumers and businesses.
When the benchmark rate goes up, borrowing money becomes more expensive, which results in slower economic growth. Central banks typically increase interest rates to lower inflation.
The survey, conducted ahead of BAM’s first monetary policy meeting on March 19, 2024, indicates a strong likelihood of stability in the benchmark rate.
Meanwhile, only a minimal 2% of investors said they think the interest rate would slide by 25 basis points.
The report explains that both local institutions and key players exhibited high confidence in the scenario of maintaining the benchmark interest rate unchanged, with probabilities of 97% and 98% respectively.
BAM has held benchmark interest rates unchanged in the previous two quarters, with observers suggesting that the measure is taken primarily to support the country’s ambitious reconstruction plan in the wake of the devastating September 8 earthquake.
The high market confidence in interest rates remaining stable is also the result of easing inflation. Inflation rose by a mere 2.4% at the end of January 2024, a strong sign of economic recovery after inflation had averaged 6.1% at the end of 2023.
As external pressures will likely continue easing throughout 2024, inflation in Morocco is likely to continue to drop even further to an average of 2.3% in 2024, nearing the recommended 2% rate, according to a report from HCP.
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