Bank Al-Maghrib Raises Interest Rates to Combat Inflation Amidst Economic Uncertainty in Morocco – March 2025 Update

In a pivotal move during its first quarterly meeting of 2025, the Bank Al-Maghrib (BAM) announced a reduction of its key interest rate by 25 basis points, adjusting it to 2.25%. This decision underscores the Morocco central bank’s commitment to fostering economic growth and job creation amidst a stabilizing inflation forecast. With inflation slowing to an average of 0.9% in 2024, the BAM aims to enhance economic activity while navigating uncertainties from external pressures and agricultural supply fluctuations. This article delves into the implications of the Bank Al-Maghrib interest rate decision and what it means for Morocco’s economic landscape.

Bank Al-Maghrib Lowers Key Interest Rate

On March 18, 2025, Bank Al-Maghrib announced a reduction of the key interest rate by 25 basis points to reach 2.25%. This decision aims to support economic activity and employment in light of favorable inflation trends.

The central bank emphasized its commitment to monitor economic indicators closely and make informed decisions based on the latest data available.

Inflation Trends and Projections for Morocco

After experiencing high inflation levels, Morocco saw a significant slowdown in 2024, averaging 0.9%. Bank Al-Maghrib projects inflation to moderately increase to around 2% over the next two years.

The underlying inflation component stood at 2.2% in 2024 and is expected to stabilize around 2% in the medium term, although uncertainties remain.

Impact of Geopolitical Tensions on Inflation

The BAM Council highlighted that both external geopolitical tensions and local agricultural supply issues pose risks to inflation forecasts in Morocco. These uncertainties could impact the stability of inflation rates.

Such external factors remain critical as they influence global inflation trajectories, thereby affecting the local economic landscape.

Future Outlook for Economic Activity

The Bank’s decision to lower interest rates is aligned with its strategy to bolster economic activity amid potential inflationary pressures.

Financial experts predict inflation expectations to remain stable, with projected average rates of 2.2% over eight quarters, reflecting a cautious yet optimistic economic outlook.

BAM’s Focus on Data-Driven Decisions

Bank Al-Maghrib reassures its commitment to base interest rate decisions on up-to-date economic data, assessing ongoing developments regularly.

This data-driven approach is crucial for maintaining both price stability and support for the Moroccan economy.

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