Morocco Cuts Interest Rate Again as Inflation Steadies

AFRICAN BUSINESS AND ECONOMYMarch 18, 2025 at 2:45 PM UTC

TLDR

Morocco's central bank, Bank al-Maghrib, has cut its benchmark interest rate to 2.25% from 2.5%, marking the second consecutive reduction
The move comes despite global trade uncertainties, particularly due to the protectionist policies of former U.S. President Donald Trump
The central bank's decision surprised analysts, as two of the country’s main banks had expected the rate to remain unchanged

Morocco's central bank, Bank al-Maghrib, has cut its benchmark interest rate to 2.25% from 2.5%, marking the second consecutive reduction. The move comes despite global trade uncertainties, particularly due to the protectionist policies of former U.S. President Donald Trump, which have stirred concerns about Morocco's trade relations. The central bank's decision surprised analysts, as two of the country’s main banks had expected the rate to remain unchanged.

The central bank cited confidence in inflation, which it forecasts will remain around 2% over the next two years. The rate cut aims to support economic activity and employment, and follows previous reductions in June and December 2024. Inflation, which surged to a record high in 2023, has been controlled, and the government hopes to encourage investment, especially ahead of the 2030 FIFA World Cup.

However, the global trade landscape remains complicated by Trump's tariffs, which could affect Morocco's trade, particularly with the U.S. and China. Despite these challenges, March’s strong rainfall offers a glimmer of hope, with expectations of improved domestic food supplies.

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Key Takeaways

Morocco’s decision to cut interest rates further signals confidence in its ability to manage inflation despite external economic pressures. While concerns about the U.S.-China trade war persist, the rate cuts are designed to support the country’s economic recovery and investment drive, including preparations for the 2030 World Cup. The strong rainfall in March also brings relief after years of drought, potentially helping to ease food inflation. However, challenges remain, particularly for Morocco’s livestock sector, which has suffered significantly due to the drought, and the political ramifications of this could affect public sentiment.

Morocco

Economy

Inflation

Interest Rate

Global Trade

Bank al-Maghrib