Skip to content Skip to Search
Skip navigation

Morocco lowers interest rate as inflation falls

Shoppers in the Marrakech souk, Morocco. Inflation has dropped partly due to lower prices of certain food products Alamy via Reuters
Shoppers in the Marrakech souk, Morocco. Inflation has dropped partly due to lower prices of certain food products

Morocco’s central bank has reduced its benchmark interest rate to 2.75 percent, down 25 basis points – the first change in almost a year – amid falling inflation.

Inflation stood at 6.6 percent in 2022 and 6.1 percent in 2023 but has returned to low levels, averaging 2.1 percent over the first five months of 2024, driven by easing external pressures and lower prices of volatile food products.

Bank Al-Maghrib (BAM) said inflation should remain close to this level until the end of 2025 before rising to 2.7 percent in 2025.

James Swanston, Middle East and North Africa economist with Capital Economics, said he expected two further 25bp cuts over the remainder of this year to 2.25 percent, based on the cautious loosening cycle being adopted by the eurozone, Morocco’s largest trading partner.

“The bigger picture is that, as we have argued before, BAM is likely to be increasingly confident that it will soon be able to resume widening the dirham’s trading band and eventually shifting to a free-float,” he said.

“This would likely be accompanied by a shift to an explicit inflation-targeting monetary framework.”

Since Morocco secured its $3bn Precautionary and Liquidity Line from the International Monetary Fund in 2014, the authorities have been on a path towards allowing the dirham to have greater flexibility and, gradually, an inflation targeting framework.

The country’s improving balance of payments and sharp slowdown in inflation have created favourable conditions for the transition. 

Morocco’s current account deficit, however, is expected to widen to 1.7 percent of GDP this year, up from 0.6 percent last year, due to higher energy imports.

The country’s foreign exchange reserves will reach MD382 billion ($38.4 billion) by the end of the year, covering 5.5 months of import of goods and services.

The central bank expects the fiscal deficit to remain at 4.4 percent of GDP this year but will fall to 4.1 percent next year.

Latest articles

hasan al fardan

Fintechs having ‘no impact’, says remittances CEO

Fintechs are no threat to the UAE-based remittances company Al Fardan Exchange, its CEO Hasan Al Fardan has declared. Al Fardan said there was no intention to drop fees to compete with finance technology startups. To date, he said, fintechs have had “no material impact on our business or our operations. We are hitting record […]

Almost 300,000 European visitors contributed to Oman's hotel revenues growing by more than 10 percent

Oman hotel revenues increase more than 10%

Hotel revenues across Oman were up by more than 10 percent in the first five months of 2024, fuelled by an increasing number of Asian and European visitors to the sultanate. Three-to-five star hotels reported revenues of OR108 million ($281 million) at the end of May, the latest data from the National Centre for Statistics […]

Saudi fishing trawlers

Saudi fishing industry bolstered by support plan

Saudi Arabia’s fishing industry has landed a financial support programme from the government as part of plans to develop and safeguard the sector. Fish production in the kingdom increased 80 percent in 2023 year on year to 214,600 metric tonnes. The goal is to increase that by 7 percent to 230,000 tonnes this year. The […]

A takeaway food stall in Saudi Arabia. While local version of Western soft drinks are increasingly popular, PepsiCo Inc's profits in the region are soaring

PepsiCo growth defies Middle East boycott of Western brands

PepsiCo Inc has reported robust growth in the Middle East, defying the boycotts that have battered other Western brands in the region. The food and beverage giant posted double-digit organic revenue growth in Egypt for the second consecutive quarter, even though it has been the subject of a backlash linked to perceived US support for […]