Morocco’s central bank keeps benchmark interest rate unchanged at 2.50%

Casablanca, Morocco, Capital Markets in Africa — Bank Al-Maghrib decided to maintains the key Bank Rate at 2.5 percent at the Board of Bank Al-Maghrib last quarterly meeting of the year held on Tuesday, December 22, 2015, according to statement released by the bank. 

“Taking into account the inflation projection that is consistent with the objective of price stability and the uncertainties surrounding national but also international economic outlook, the board decided to maintain the key rate at 2.5%, while keeping close attention to all these developments,” the bank says in a statement.

The Morocco’s central bank said that second quarter data indicate a 4.3 percent expansion in GDP and predicted the full year 2015 growth to be 4.5 percent.  However, the banked revised downwards the 2016 growth to 2.1 percent, with a deceleration of its non-agricultural component to 2.7 percent and a contraction in the agricultural value added to 4.3 percent under the assumption of a moderate cereal output.

The statement stated: “External accounts continued to improve, as the trade deficit narrowed by 19.7 percent year on year at end-November. This result is mainly due to a decline by 29 percent in the energy bill and an increase by 18.5 percent in shipments of the automotive industry and by 20.6 percent in phosphates and derivatives’ exports”.

In addition, the inflation, measured by the year-on-year change in the consumer price index, stood at 0.9 percent in November, down from 1.4 percent in October. This change results mainly from the slowdown in core inflation from 1.4 to 0.9 percent, primarily due to the dissipation of the impact of the rise in prices of cereal-based products in November 2014. The decline in inflation is also the result of the less rapid increase in volatile food prices from 6.3 to 4.7 percent.

Furthermore, the bank predicted Inflation to average 1.6 percent in 2015, 1.2 percent in 2016 and 1.5 percent at the end of the forecast horizon (first quarter of 2017). However, pointed that these forecasts do not take into account the decision to remove sugar subsidy as of January 1st, 2016, whose upward impact on inflation would be 0.27 point in 2016 and 0.48 point in the first quarter of 2017.