Morocco’s Central Bank raises key interest rate to 3% to mitigate inflation

Morocco’s Central bank decided on Tuesday to lift its rates by 50 basis points to 3 percent to counter inflationary pressures exerted both at the domestic and international levels.

During its first meeting of 2023 held in Rabat, the Board of Bank Al Maghrib discussed the evolution of the national economic situation and the Bank’s macroeconomic projections for the next eight quarters, noting that inflation continues to accelerate, driven in particular by domestic supply shocks on certain food products.

After reaching 6.6 pc in 2022, its highest since 1992, inflation is expected to remain at high levels over the medium term. It would stand in 2023 at 5.5 pc on average and its core component at 6.2 pc due to the surge in prices of some food products, according to the Bank forecast.

These projections assume that the shocks behind this increase would gradually dissipate in the second half of the year as a result of the various measures taken by the Government in this regard.

In 2024, assuming that both internal and external pressures would continue to ease, the core inflation would be at 2.3 pc but the start of the planned decompensation of prices of subsidized products would keep inflation high overall at 3.9 %, according the Bank’s projections.