The Bank Al-Maghrib (BAM), Morocco's central bank, has decided to maintain its key interest rate at 2.25%, citing a highly uncertain international environment marked by geopolitical tensions and rising energy prices. This decision was made during the bank's third quarterly meeting of 2026, where policymakers reviewed the national and international economic situation and updated their macroeconomic projections. The bank's decision aims to balance the need to support economic growth with the risk of inflation.
The global economic landscape remains challenging, with persistent conflicts, geo-economic tensions, and risks to energy and food supplies. The bank's governor noted that these factors, combined with the effects of climate change, have created a "very high" level of uncertainty. Domestically, Morocco faces uncertainties related to climate conditions and the future orientation of economic policy. These factors have influenced the bank's decision to keep the interest rate unchanged.
Despite rising international energy prices, inflation in Morocco remains low. The average inflation rate for the first eight months of 2026 was 0.3%, driven by declining food prices. The BAM forecasts an inflation rate of 0.7% for 2026, which is expected to rise to 1.5% in 2027. The bank also expects the underlying inflation rate to increase from -0.2% this year to 2.2% in 2027, as the effects of lower food prices, such as olive oil, dissipate and imported inflation remains high.
The BAM has also revised its growth forecasts for Morocco. The bank expects the economy to grow by 4.4% in 2026, driven by a 16% rebound in agricultural value-added, supported by an estimated cereal harvest of 93 million quintaux. However, growth is expected to slow to 2.9% in 2027, assuming a return to average cereal production levels. Non-agricultural activities are expected to grow at a more moderate pace, slowing from 4.5% in 2025 to 3.1% in 2026.
The bank's decision to maintain the interest rate at 2.25% was influenced by its assessment of inflation expectations, which remain "well anchored." A survey of financial sector experts conducted in the third quarter expects an average inflation rate of 2.1% over the next eight quarters and 2.2% over the next 12 quarters. The bank's policymakers believe that maintaining the current interest rate will support economic growth while keeping inflation under control.
The BAM's projections are based on a careful assessment of the current economic situation and future prospects. The bank's governor emphasized that future policy decisions will be made on a "meeting-by-meeting" basis, depending on available data. This approach aims to ensure that monetary policy remains flexible and responsive to changing economic conditions.
In conclusion, the Bank Al-Maghrib's decision to maintain its interest rate at 2.25% reflects its cautious approach to monetary policy in a highly uncertain environment. The bank's forecasts for economic growth and inflation suggest that Morocco's economy will continue to face challenges, but the current interest rate is seen as appropriate to support growth while maintaining price stability.
Key points
- The Bank Al-Maghrib maintains its interest rate at 2.25% amid global economic uncertainty.
- Morocco's economy is expected to grow by 4.4% in 2026, driven by a rebound in agricultural value-added.
- Inflation is forecast to remain low, at 0.7% in 2026, before rising to 1.5% in 2027.
