War in the Middle East: The effects on inflation are already being felt

One month after the start of the conflict in the Middle East, Morocco finds itself at an economic crossroads. Caught between a cautious monetary policy and severe external shocks, the Kingdom’s economy is testing its resilience.

Industry professionals still expect fuel prices to rise due to geopolitical tensions in the Middle East disrupting shipping routes. Additionally, the port of Tangiers Med anticipates an increase in traffic and transport costs linked to ships being rerouted via the Cape of Good Hope, which is lengthening transit times and driving up freight costs, according to media reports. According to the latest analyses by BMI-Fitch Solutions and the International Monetary Fund (IMF), the situation remains under control in a baseline scenario, but the risks of inflationary slippage are very real. Against this backdrop of turbulence, Morocco’s monetary policy is drawing particular attention. According to a BMI-Fitch Solutions report titled “Bank AlMaghrib To Hold Rates Through 2026 As US–Iran Conflict Tilts Risks Towards Hikes- March 2026 ” , the Moroccan central bank (Bank Al-Maghrib, BAM) is expected to keep its key interest rate unchanged at 2.25% throughout 2026. This decision, adopted at the March 17 meeting, is based on inflationary pressures deemed to remain benign in the short term and sustained investment activity. However, the picture is not entirely straightforward. The research institution has revised its inflation forecast for 2026 upward, from 1.1% to 1.6%. This increase is directly attributable to rising fuel prices and the costs of imported goods. In Morocco, where fuel prices are deregulated, the price of diesel jumped 18.5% on March 16, as an immediate repercussion of regional tensions.
The conflict, described by BMI-Fitch Solutions as the “U.S.-Iran conflict” , is acting as a major transmission channel. The IMF, in a global note dated March 30, 2026, titled “How the War in the Middle East is Affecting Energy, Trade, and Finance ” , confirms that the war in the Middle East is causing an asymmetric shock: energy-importing countries, such as Morocco, are more exposed than exporters. This geopolitical pressure is also evident in the foreign exchange market. Since February 16, the Moroccan Dirham has depreciated by 2.8%, reaching 9.39 MAD/USD on March 17, according to data from BMI-Fitch Solutions. This trend reflects a broad strengthening of the U.S. dollar and increases the cost of imports denominated in foreign currency (energy, intermediate food products). Nonetheless, the Moroccan Dirham remains within the upper range of its official fluctuation band, which, for now, limits the need for the central bank to intervene significantly in the foreign exchange market.
Fatim-Zahra TOHRY