Morocco’s Central Bank keeps key Interest Rate Unchanged at 2.75%

Morocco’s central bank kept Tuesday the key interest rate unchanged at 2.75%, saying borrowing costs were in line with the financial and economic outlook.

Morocco’s economic growth will fall to 2.8% this year from 3.4% last year due to the drought, the bank said in a statement after the quarterly meeting of its board.

The bank added that it expects growth to accelerate to 4.4% next year, provided there is a good harvest of grain.

Morocco’s central bank predicted inflation would slow to 1.3% this year from 6.1% in 2023, before rising to 2.2% in 2025, following a drop in volatile food prices.

The bank said those figures remain “unstable” due to frequent droughts and the impact of conflicts in Ukraine and the Middle East on energy prices.

Rising auto exports, tourism sector revenues and Moroccan remittances abroad are expected to keep foreign exchange reserves at Dh384.3 billion, or $40 billion, in 2024, and 41 billion in 2025, enough to cover import needs for five and a half months.

Higher tax returns are expected to reduce the fiscal deficit to 3.9% of GDP in 2025, from the 4.4% expected this year, the bank said.