Morocco’s central bank kept its benchmark interest rate steady at 2.25% on Tuesday, citing a sharp decline in inflation and a stronger-than-expected rebound in non-agricultural growth, while maintaining a cautious stance amid lingering global uncertainty.
Bank Al-Maghrib said inflation had slowed “markedly” in recent months, easing from an average of 2% in the first quarter to 0.4% by May, largely due to the cooling of food prices, especially fresh meat. Inflation is now expected to close 2025 near 1%, before edging up to 1.8% in 2026, with core inflation tracking a similar path.
The bank noted that lending conditions continue to ease, with interest rates on credit to the non-financial sector falling by 45 basis points since it began cutting in June 2024. Credit growth is projected to accelerate to over 6% in both 2025 and 2026, reversing the slowdown seen in previous years.
Despite this recovery, policymakers opted to hold, citing “strong uncertainties” around global trade policy, geopolitical tensions, and domestic agricultural output. The board emphasized it will monitor the pass-through of rate cuts, particularly for small and medium-sized enterprises, and base future decisions on incoming data.
The decision comes as Morocco’s broader macroeconomic picture stabilizes. The current account deficit is expected to remain near 2% of GDP through 2026, foreign reserves are projected to reach MAD 423.7 billion by end-2026, and budget consolidation efforts are expected to narrow the fiscal deficit from 3.9% in 2025 to 3.4% in 2026.
While the bank sees momentum in infrastructure-driven growth, especially ahead of the 2030 World Cup, it warned that external shocks and supply-side constraints could weigh on the outlook. For now, however, the policy stance remains unchanged, with inflation under control and credit dynamics gaining traction.
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