News
Wednesday 22 March 2017

Morocco's Central Bank Maintains Interest Rate at 2.25 pc

Vocal synthesis
Morocco's Central Bank Maintains Interest Rate at 2.25 pc


Morocco's central bank held its benchmark interest rate at 2.25 percent forecasting inflation would remain subdued.

   “Considering inflation forecast as well as recent trends and medium-term projections of macroeconomic conditions, the Board has determined that the current level of the key rate continues to ensure appropriate monetary conditions, and decided to keep it unchanged at 2.25 percent”, the central bank governor, Abdellatif Jouahri, said at a press conference following the board's quarterly meeting.

   The Board noted that inflation remained stable at 1.6 percent in 2016, in line with Bank Al-Maghrib forecasts.

   In January 2017, it stood at 2.1 percent, including in particular a 19.4 percent increase in fuel and lubricant prices and an acceleration in core inflation to 1.2 percent.

   In the medium term, inflation should however remain subdued. It is projected to edge down to 1.1 percent in 2017, reflecting the waning effect of shocks on volatile food prices, before increasing to 1.7 percent in 2018.

   Core inflation would trend upward, rising from 1.5 percent in 2017 to 1.9 percent in 2018, owing to improved domestic demand and higher imported inflation.

   The central bank expects GDP to grow by a mere 1.1 percent in 2016, down from 4.5 percent in 2015, reflecting a 10.1 percent contraction in the agricultural added value and a 2.5 percent increase in nonagricultural GDP.

   On the labor market, the year 2016 recorded a net loss of 37,000 jobs and a significant decrease in the participation rate, causing the unemployment rate to fall from 9.7 to 9.4 percent.

   In the medium term, growth is set to pick up, driven by better weather conditions and improved foreign demand.

   For 2017, Bank Al-Maghrib projections, based on weather data as at February 20, point to a rebound in cereal production at 78 million quintals and a rise in agricultural added value by 11.5 percent.

   Nonagricultural GDP is expected to increase by 3.4 percent and overall growth would then reach 4.3 percent.

   In 2018, assuming an average crop year, agricultural growth would decelerate to 2.5 percent while nonagricultural GDP would improve by 3.9 percent, bringing overall growth to 3.8 percent.

MAP 21 March 2017