Key rate BAM’s wait-and-see policy

The Board of Bank Al-Maghrib (BAM), meeting on Tuesday September 24, opted for caution. It decided to maintain the key rate at 2.75%, believing that the current monetary policy stance remains appropriate.

Several factors justify this decision. Firstly, inflation has remained moderate since the beginning of the year, thanks in particular to falling food prices and a slowdown in core inflation, now around 2% after having reached 5.6% in 2023. According to BAM projections, this level should be maintained over the next eight quarters.

Taking into account adjustments to commodity subsidies and a limited change in volatile food prices, headline inflation should decelerate to 1.3% this year, from 6.1% in 2023. It could nevertheless accelerate to 2.5% in 2025.

BAM’s decision was also motivated by the stability of inflation expectations, with forecasts of 2.2% to 2.3% over 8- and 12-quarter timeframes respectively.

 BAM’s Board also took into account economic and social uncertainties, notably due to the global geopolitical context marked by the war in Ukraine and tensions in the Middle East. Added to this are national risks linked to recurrent droughts and water stress, which pose threats to agricultural production and overall economic growth. In addition, ongoing negotiations on social dialogue, combined with the orientations of the Finance Bill 2025, could have a significant impact on demand and prices.

The Board forecasts growth of 2.8% this year, before accelerating to 4.4% in 2025. This projection includes a 6.9% drop in agricultural value added in 2024, followed by an 8.6% recovery in 2025, assuming average grain production of 55 million quintals. Non-agricultural activities, meanwhile, should post stable growth of 3.9% over the same period, driven by manufacturing, mining, and tourism.

Khadija MASMOUDI