Morocco's central bank, Bank Al-Maghrib, has decided to maintain its key interest rate at 2.25%. This decision was made during the bank's third quarterly meeting of the year, held in Rabat. The bank's decision takes into account the medium-term inflation outlook and the expected consolidation of non-agricultural economic activity.
According to Bank Al-Maghrib's projections, inflation is expected to be 0.7% for the entire year of 2026. However, it is expected to increase to 1.5% in 2027, driven by its underlying component. The underlying inflation is expected to accelerate from -0.2% this year to 2.2% in 2027. This is due to the dissipation of the impact of the contraction in food prices, particularly olive oil, and the persistence of imported inflation at a relatively high level.
The survey conducted by Bank Al-Maghrib in the third quarter of 2026 showed that financial sector experts expect an average inflation rate of 2.1% over the next 8 quarters and 2.2% over the next 12 quarters. The bank's council considers that uncertainties surrounding economic prospects remain at a very high level. These uncertainties are due to various factors, including the persistence of conflicts, geo-economic tensions, and concerns about energy and food supplies.
Bank Al-Maghrib has revised its economic projections, moving from a scenario of accelerated activity to a more moderate growth perspective. A slowdown is anticipated in 2027, with the growth rate expected to be 2.9%. The agricultural sector is expected to rebound by 16% this year, driven by an estimated cereal harvest of 93 million quintals. However, it is expected to decline by 7.6% in 2027, assuming a return to average cereal production of 50 million quintals.
For non-agricultural activities, the growth rate is expected to decelerate from 4.5% in 2025 to 3.1% this year. This is due to a less favorable evolution of certain sectors, including extractive and manufacturing industries. However, it is expected to rebound to 4% in 2027. The external accounts are also expected to be affected, with the energy bill projected to slow down to 116 billion dirhams in 2027.
Bank Al-Maghrib expects the current account deficit to widen from 2.4% of GDP in 2025 to 4.6% this year. However, it is expected to decrease to 3% in 2027. The bank also projects a gradual increase in the liquidity needs of banks, which is expected to reach 168.2 billion dirhams in 2027. The credit to the non-financial sector is expected to accelerate, with a growth rate of 8.1% in 2026 and 6.1% in 2027.
The budget deficit, excluding the proceeds from the sale of state participations, is expected to be 3.4% of GDP this year and 3.5% in 2027. This projection takes into account the budget execution for the first eight months of the year, which showed a 9.6% increase in ordinary revenues and a 10.5% increase in global expenditures.
Key points
- The key interest rate was maintained at 2.25%
- Inflation is expected to be 0.7% for 2026 and 1.5% for 2027
- The growth rate is expected to be 2.9% in 2027
