Morocco’s central bank held its benchmark interest rate steady at 2.25% on Tuesday, citing contained inflation and a global economic backdrop the bank’s council described as facing persistently elevated uncertainty.

The rate decision

Bank Al-Maghrib’s council, meeting for the third quarter of 2026, kept its key rate unchanged, judging the move appropriate given two factors: the expected consolidation of medium-term inflation at moderate levels, and the anticipated stabilization of non-agricultural economic activity. The bank said it will continue monitoring domestic and external conditions closely and base future decisions on the latest available data at each meeting.

Inflation: low now, rising ahead

Inflation has stayed weak, averaging 0.3% over the first eight months of the year, helped by falling prices for some food products. Bank Al-Maghrib expects it to reach 0.7% for all of 2026, before climbing to 1.5% in 2027 — driven mainly by its core component, projected to accelerate from -0.2% this year to 2.2% next year as the effect of falling food prices, especially olive oil, fades and imported inflation stays relatively elevated.

Financial-sector experts surveyed in the bank’s third-quarter outlook survey expect average inflation of 2.1% over an eight-quarter horizon and 2.2% over 12 quarters.

Growth: a slowdown, driven by agriculture’s swing and softer non-farm activity

Morocco’s economy is expected to slow to 4.4% growth this year, from 4.9% in 2025, before easing further to 2.9% in 2027.

Agriculture: Value added is projected to rebound 16% this year, based on the agriculture ministry’s estimate of a 93-million-quintal cereal harvest, before falling back 7.6% in 2027 on an assumption of a return to average cereal output of 50 million quintals.
Non-agricultural activity: Growth is expected to slow to 3.1% this year from 4.5% in 2025, tied to weaker-than-expected growth in extractive and manufacturing industries, before rising to 4% in 2027.

Jobs: unemployment falls despite the slowdown

Labor force survey results from the High Commission for Planning, covering the second quarter of 2026, point to continued momentum from previous quarters: 406,000 net jobs were created year-on-year, and the narrow unemployment rate fell to 9.5% overall, 11.9% in urban areas and 5.4% in rural areas.

External accounts: a widening deficit as the energy bill climbs

The energy import bill is projected to jump 28.4% to 138.1 billion dirhams this year, before easing to 116 billion in 2027.
Raw material imports are expected to rise 53.4% in 2026 and 8.3% in 2027; capital goods imports by 15.6% and then 8.8%, reaching 250.7 billion dirhams.

On the export side, automotive sector exports are expected to resume gradual growth after near-stagnation in 2025, reaching 202.2 billion dirhams by 2027. Phosphate and derivative sales are projected to grow 9.7% this year on strong fertilizer prices, then 12.1% to 122.6 billion dirhams in 2027.

Travel receipts are expected to keep climbing, reaching 160 billion dirhams by 2027, while remittances from Moroccans abroad are projected to strengthen to 136.3 billion dirhams the same year.

The current account deficit is expected to widen notably, from 2.4% of GDP in 2025 to 4.6% this year, before narrowing to 3% in 2027.

Foreign direct investment receipts are projected at the equivalent of 3.5% of GDP annually.
Official reserve assets are expected to reach 502.8 billion dirhams by the end of 2026 and 515.3 billion by the end of 2027 — equivalent to about 5.5 months of imports of goods and services.

Commodities: oil higher, phosphates elevated, food prices under pressure

Oil prices rose notably following disruptions in some major producing countries that damaged energy infrastructure and shipping. Brent crude is expected to average $87.2 a barrel this year, up from $68.2 in 2025, before easing to $73.5 in 2027.

Phosphate prices are expected to stay elevated this year on higher input costs — particularly sulfur — and continued Chinese restrictions on phosphate fertilizer exports. According to the latest estimates from research group CRU, Moroccan phosphate rock prices are expected to rise from $713 a ton in 2025 to an average of $860 in 2026, before falling to $803 in 2027.

Persistently high fertilizer prices, drought conditions and growing disruptions to Black Sea grain exports continue to pressure food prices; the FAO Food Price Index is expected to rise 2.3% this year and 2.4% in 2027.

The global backdrop

The council noted rising military conflict in the Middle East and the continuation of the Russia-Ukraine war, which have worsened disruptions to production and supply chains — particularly for energy, food and key inputs — pushing up commodity prices with sharp volatility, and fueling inflation. Global growth is still holding up relatively well, the council said, supported by a boom in AI-related investment and rising public spending, particularly on defense.

Global growth is expected to slow from 3.2% in 2025 to 3% this year and 2.9% in 2027:

• U.S.: 2.1% growth expected in 2026, supported by AI-linked investment and resilient consumer spending.
• Eurozone: Growth projected at 1.3% in 2026 and 1.2% in 2027, helped by AI investment, German public spending on defense and infrastructure, and tourism momentum in southern Europe.
• China: Growth expected to slow gradually from 5% in 2025 to 4.4% by 2027, weighed down by weak domestic demand, real estate sector troubles and an aging population.
• India: Growth expected to fall from 7.5% in 2025 to 6.4% by 2027, as unfavorable monsoon rains and U.S. tariff policy weigh on private consumption and investment.

Global inflation is expected to accelerate from 2.9% in 2025 to 3.4% in 2026, before easing to 3.2% in 2027. In the eurozone, inflation is projected to rise from 2.1% in 2025 to 2.8% this year, before falling back to 2.4% in 2027. In the U.S., inflation is expected to stay above the Federal Reserve’s target, reaching 3.4% this year, up from 2.7% in 2025 , before easing to 2.8% next year.

Domestic uncertainty tied to weather and fiscal policy

The council said uncertainty around the economic outlook remains very high globally, driven by persistent geopolitical conflicts and tensions, growing concern over energy, food and key input supplies, the effects of sharply rising sovereign bond yields on financial markets, and increasingly severe climate change impacts. Domestically, uncertainty is tied to weather conditions and the future direction of economic policy.

Banking and public finances

Banks’ liquidity needs are expected to grow gradually, mainly due to expected growth in currency in circulation, reaching 168.2 billion dirhams by 2027. Credit to the non-financial sector is expected to accelerate notably, from 4.8% growth in 2025 to 8.1% this year, before easing to 6.1% in 2027. The dirham’s real effective exchange rate, after rising 2% in 2025, is expected to decline 4.1% this year and 2% in 2027, a level the bank’s quarterly assessments describe as broadly consistent with economic fundamentals.

Budget execution over the first eight months of the year shows ordinary revenue up 9.6%, largely on higher tax receipts, while total spending rose 10.5%, reflecting growth in spending on goods and services and debt interest.

Taking into account the 2026 finance law, the 2026-2028 budget programming, and the additional 20 billion dirham allocation opened by the government in May 2026, Bank Al-Maghrib expects the budget deficit (excluding privatization revenue) to reach 3.4% of GDP this year and 3.5% in 2027.