Will Bank Al-Maghrib cut rates or hold steady? Significant decision looms as meeting set for this week

The Moroccan financial sector is gearing up for the first quarterly meeting of Bank Al-Maghrib this year, set for March 18. Bank Al-Maghrib will decide whether to cut or maintain its key interest rate, which has stood at 2.50% since the end of 2024.

Analysts and international reports, including a recent analysis by Fitch Solutions, suggest that the bank may continue its “easing policy” to support economic growth amid global and national economic conditions. 

Yet opinions among financial experts remain divided on whether a rate cut or stability is the more likely outcome.

Bank Al-Maghrib ended 2024 with a decision to cut the key interest rate by 25 basis points to 2.50%. 

Since then, several key developments have emerged—Donald Trump’s return to office with controversial economic and trade policies, a ceasefire in Gaza, and heavy rainfall and snowfall in Morocco, which could boost agricultural output this season.

Mahdi Farrouhi, an economics professor at Kenitra’s Faculty of Economics and Management, outlined two possible scenarios for the upcoming decision.

Farrouhi said that the most likely outcome is that the bank will keep the interest rate at 2.50% due to inflationary pressures. 

According to Morocco’s High Commission for Planning, the Consumer Price Index (CPI) rose 3.3% between January 2024 and January 2025 and 1.6% between December 2024 and January 2025, showing renewed inflationary pressures.

“While inflation remains within a manageable range, further interest rate cuts could worsen these pressures and create economic imbalances,” Farrouhi told Hespress Ar. 

Farrouhi pointed to a slowdown in money supply growth, with demand deposits rising by 10.3% and savings accounts by just 2.50%, reflecting investor caution. A

Liquidity appears to be shifting toward the Casablanca Stock Exchange, which has seen significant activity in recent months.

Farrouhi said that recent rainfall would likely boost agriculture and overall economic growth, reducing the need for further monetary easing. He also noted that global economic shifts could impact Morocco’s trade and inflation, making Bank Al-Maghrib more cautious about cutting rates.

Another economic expert, Abderrazak Elhiri, also sees a rate freeze as the most probable outcome. 

Elhiri said that Bank Al-Maghrib’s interest rate now aligns with that of the European Central Bank (ECB) after the ECB’s recent 0.25% rate cut in March 2025. Given that the EU is Morocco’s top trade partner, this parity might influence the bank’s decision.

Despite a cautious economic outlook, Elhiri noted that recent rainfall could improve agricultural output, which has been struggling due to past droughts. 

This, in turn, could support job creation and economic stability. However, he also warned that Trump’s economic policies could drive up global prices, fueling inflation.

While an interest rate cut is a less likely scenario, Elhiri acknowledged that the central bank might consider one if it aims to stimulate investment and consumption, especially following the ECB’s move.