Fitch Solutions expect Morocco’s central bank to cut benchmark rate to 2.25% in H2

Morocco’s central bank is expected to take more monetary easing steps in the second half of this year by cutting the benchmark rate to 2.25% from 2.75% currently, Fitch Solutions said.

“We forecast that BAM will cut its policy rate in another two steps of 25bps in September and December 2024, to 2.25% by end-year as inflation will remain below 2.0% in H2 2024 despite a reduction in subsidies on butane gas,” Fitch Solutions said in analysis of North African monetary policy.

It also expects the central bank to further cut the rate to 2% in 2025, as inflation decelerates. The decision would meet the financing needs of the economy and reduce the government’s borrowing cost, it said.

Morocco would thus diverge from Algeria and Tunisia where high inflation prompts a high benchmark interest rate at 3% and 8% respectively.

Egypt, however, is expected to follow Morocco’s suit and start a monetary easing cycle in 2025 as inflation is expected to fall below 20%, from 30% this year.