Morocco Keeps Interest Rates Steady as It Monitors Impact of June Cut
TLDR
- Bank al-Maghrib maintains key interest rate at 2.75% after June's surprising cut, monitoring inflation above target at 1.7% in August.
- First rate cut since 2020 aims to boost economic growth amid investments for post-earthquake reconstruction and 2030 FIFA World Cup preparations.
- Central bank anticipates potential future rate decrease amidst global energy price hikes and wage rise effects on economic outlook.
Morocco’s central bank, Bank al-Maghrib, held its key interest rate at 2.75% during its quarterly policy meeting, maintaining its position following a surprise rate cut in June. The central bank is assessing the effect of the earlier reduction on inflation, which remains above its 1.3% target, standing at 1.7% in August.
The June rate cut was the first monetary easing since 2020, part of a strategic shift to support economic growth. With ambitious public spending plans underway to rebuild areas damaged by last year’s earthquake and preparations for co-hosting the 2030 FIFA World Cup, another rate reduction is anticipated.
The bank cited uncertainty in the outlook, including concerns about rising global energy prices and the impact of domestic wage increases. Non-agricultural activities continue to recover, bolstered by expected private and public investment.
Key Takeaways
Morocco’s central bank is taking a cautious approach by holding interest rates steady while monitoring inflation and economic recovery. As the country enters a new phase of investment, particularly in rebuilding and infrastructure projects, another rate cut is likely by year-end to support growth. However, uncertainty over energy prices and wage increases may influence future monetary policy decisions.
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