Bank Al-Maghrib (BAM) maintained its key rate at 2.75% during its latest meeting, believing the current monetary policy stance remains appropriate despite a projected economic slowdown in 2024.
BAM forecasts a slowdown in economic growth to 2.8% in 2024, primarily due to a contraction in agricultural added value, but non-agricultural growth should continue to improve, rising from 3.6 percent in 2023 to 3.9 percent in 2024 and 2025.
Overall economic growth is expected to rebound to 4.4% in 2025, driven by non-agricultural sectors like manufacturing, extractive industries, and tourism.
“While agricultural production remains, to a large extent, dependent on weather conditions, available infra-annual data generally suggest that the recovery of non-agricultural activities continues and is likely to be supported in the medium term by the expected momentum of public and private investment,” according to BAM.
Overall inflation is projected to decelerate from 6.1% in 2023 to 1.3% in 2024, but it’s expected to accelerate to 2.5% in 2025 due to changes in price subsidies and potential fluctuations in volatile food prices.
The decision to maintain the key rate at 2.75% reflects BAM’s assessment that the current monetary policy stance is appropriate.
The Council noted that inflation expectations have strengthened, as indicated by the BAM quarterly survey of financial sector experts.
The economic and social outlook remains uncertain, with global factors like the war in Ukraine and domestic factors like drought and social dialogue posing significant risks.
BAM emphasized that it will continue to closely monitor developments to inform future policy decisions.
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