Solid Growth, Contained Inflation…: Why Bank Al-Maghrib Left Its Key Rate Unchanged

Bank Al-Maghrib (BAM) decided to maintain its key policy rate at 2.25% following the meeting of its Board held on Tuesday, June 23.
According to the central bank, the expected acceleration in inflation remains consistent with its medium-term objective of maintaining price stability.
BAM forecasts average inflation of 1.5% in 2026 and 2.1% in 2027, compared with an average of approximately 0.8% over the past two years.
This expected increase comes against a backdrop of continued repercussions from the conflict in the Middle East on global energy markets and supply chains.
Fuel prices rose by 27.6% year-on-year in May. Combined with higher imported inflation, this increase is expected to gradually feed through into domestic prices.
Nevertheless, the central bank does not identify any generalized inflationary pressures stemming from domestic demand.
Core Inflation Remains Under Control
Core inflation is projected to stand at 0.2% in 2026.
BAM attributes this exceptionally low level primarily to falling prices within the food component of the index, particularly olive oil prices.
In 2027, however, core inflation is expected to accelerate to 2.9%, reflecting the fading of this exceptional factor and the strengthening of imported inflation.
Meanwhile, medium-term inflation expectations among financial sector experts remain anchored at around 2.2%.
Higher Oil Prices Expected
Bank Al-Maghrib forecasts an average Brent crude oil price of USD 92.3 per barrel in 2026, compared with USD 68.1 in 2025, before easing to USD 71.6 in 2027.
The central bank also notes that the recently concluded memorandum of understanding between the United States and Iran could contribute to a gradual normalization of maritime transport, although the economic consequences of the regional conflict are expected to continue weighing on the global economy in the short term.
Stronger Growth Outlook
Economic activity is expected to remain on an upward trajectory.
Following growth of 8.2% in 2025, agricultural value added is projected to increase by 16% in 2026, supported by a cereal harvest estimated at 90 million quintals.
Non-agricultural activities are expected to maintain a solid growth pace, averaging 4.2% over 2026 and 2027.
Overall, Morocco’s economy is projected to expand by 5.2% in 2026, following growth of 4.9% in 2025.
Growth is then expected to moderate to 3.1% in 2027, reflecting a projected 7.6% decline in agricultural value added, based on the assumption that cereal production returns to an average harvest level.
The central bank therefore considers the current monetary policy stance appropriate, balancing stronger economic growth with inflation that remains broadly consistent with its medium-term price stability objective.o
K.M.