Morocco's central bank likely to raise interest rate; here is what it might mean for you

Morocco’s Central Bank is expected on Tuesday to make another hike in its key interest rate – a decision that will tighten circulation of money in a climate marked by rising inflation and sluggish growth.

Here is what that might mean for you

The key interest rate is the interest rate that a central bank sets for lending money to other banks. It operates as a reference point for other interest rates in the economy, such as mortgage rates and car loan rates.

When the key interest rate is high, borrowing money becomes more expensive, and people are less likely to take out loans.

In September and December of last year, the Central Bank made a 50-point increase in the key rate – a basis that is expected to be kept in March, according to three of the kingdom’s major financial institutions who spoke to Bloomberg.

Banking sources told Hespress EN that a 50-point increase in the key interest rate – currently standing at 2.5% – would see customers pay 0.02% more for interest rates on their loans.

But the decision is likely to have a weighty impact on larger loans, usually made by businesses for investment purposes.

BAM Wali, Abdellatif Jouahri had said that the new rates will only apply to new and future loans, and all contracts made prior to the increase will be unaffected.

The goal of the monetary measure is to contain inflation in view of slow economic growth forecasts, but the responsibility for acting on citizens’ purchasing power falls under the government’s purview, he asserted.