BAM plays it safe in the face of global turbulence
Faced with a tense international environment and a still uncertain outlook, the Moroccan Central bank (Bank Al-Maghrib, BAM) has chosen to stay on the sidelines. At the end of its quarterly meeting on June 24, the institution decided to keep its key rate unchanged at 2.25%, fostering monetary stability despite improving domestic indicators.
The sharp fall in inflation, the upturn in employment and the renewed strength of the non-agricultural sectors were not enough to change the central bank’s stance. The Board remains vigilant, believing that “the high degree of uncertainty surrounding the outlook” warrants a pause. Pending clearer signals, BAM intends to continue assessing the situation “meeting by meeting”, based on the most recent data.
This cautious stance somewhat thwarts investor expectations. On the eve of the meeting, the latest survey published by BMCE Capital Global Research revealed that 63% of Moroccan institutional investors were expecting a further 25 basis point cut in the key rate. What’s more, 75% of them were expecting two cuts of 25 basis points over the whole of 2025. None of the survey participants were betting on a rate hike, even in the event of a resurgence of inflationary pressures. But the resurgence of geopolitical risks, fueled in particular by the escalation of the Israel-Iran conflict, seemed likely to prompt BAM to adopt a cautious stance. In this respect, the Board’s decision remains consistent with current international developments: while the European Central Bank (ECB) has embarked on an easing cycle, the US Federal Reserve has opted for a wait-and-see attitude.
That said, inflation is continuing to ease: after averaging 2% in the first quarter, it fell to 0.7% in April and then to 0.4% in May, due to the easing of food prices (fresh meats in particular). BAM now forecasts average inflation of 1% in 2025, rising slightly to 1.8% in 2026. Expectations remain under control: financial sector experts are forecasting rates of 2.3% in 8 quarters and 2.5% in 12 quarters.
Previous rate cuts continue to have an impact: lending rates to the non-financial sector have fallen by 45 basis points since June 2024. BAM intends to keep a close eye on this dynamic, in particular to ensure that it benefits VSMEs (very small and medium-sized enterprises). At the same time, the national economy is accelerating. Growth will be better than expected in 2024 (+3.8% according to the High Commissioner’s Office for Planning, HCP). should reach 4.6% this year before stabilizing at 4.4% in 2026. Non-agricultural sectors are showing a solid upturn (+4.5% forecast for 2025 and 2026), buoyed by investment in infrastructure, climate-related projects and major events expected by 2030. Agriculture is also expected to contribute, with a 5% rise in value added.
External balances are strengthening. Exports are set to grow by 5.1% in 2025 and 9% in 2026, driven by phosphate and its derivatives. The automotive industry, penalized by the European economic situation, should rebound in 2026. The energy bill will continue to fall (MAD 96 billion / USD 10 billion expected in 2026), while tourism receipts will continue to rise, reaching MAD 128.4 billion (USD 13 billion). By contrast, remittances from Moroccans living abroad (MRE), after declining in recent months, are expected to end the year with lower figures.
Khadija Masmoudi
