Central Bank key rate unchanged

The central bank finally opted for the status quo on Tuesday. The key interest rate is kept unchanged at 3%. The decision made by the Board of Bank Al-Maghrib (BAM), held on Tuesday, June 20, comes after three successive increases of a total of 150 basis points. It was more or less expected, especially given the slight dip in the inflation rate.

The pace of inflation, which is BAM’s main target, has slowed but remains at high levels due to the increase in the cost of fresh food products: the Consumer Price Index (CPI) fell from 8.2% in March to 7.8% in April and 7.1% in May. In February, the CPI had reached 10.1%. The central bank expects inflation to average 6.2% this year and 3.8% in 2024. Its underlying component should experience a similar trajectory, rising from 6.6% in 2022 to 6.1% this year. then to 2.9% in 2024.

For its next meetings, the Board of the central bank intends to take into account in particular « the in-depth and updated assessment of the cumulative effects of its rate increases and the impact of the various measures put in place by the Government to support certain economic activities and the purchasing power of  households «.

In terms of growth, the central bank’s forecasts have been revised downwards once again. Bank Al-Maghrib expects a rate of 2.4% versus 2.6% at the start of the year. Growth should increase and reach 3.3% in 2024 but subject to a good crop year.

The low level of forecast growth is explained in particular by a limited increase of 1.6% in agricultural value added after its 12.9% decline  in 2022. The cereal harvest remains low: 55.1 million quintals while the Government was counting on 75 million. It will be necessary to wait until 2024 for a return to an average production of 70 million quintals and an increase in agricultural added value of 5.5%.

Growth is also impacted by the slowdown to 2.5% in the value added of non-agricultural activities. These are suffering from an overall unfavorable external environment. It should improve and reach  3.2% in 2024!

Khadija MASMOUDI