Morocco's central bank slows interest rate hike to 3% after three hikes

The Central Bank of Morocco Bank al Maghrib (BAM) decided on Tuesday to stop raising interest rates by 3%, after three consecutive increases (of 150 basis points) to assess the impact of its monetary policy on inflation, which stood at 7.1% year-on-year in May. 

The issuer stressed that it decided to "pause the monetary policy tightening cycle" to see the impact of its measures on the real economy, according to a statement. 

Decisions to be taken at upcoming meetings of the bank's board of directors "will take into account the deepened and updated assessment of the cumulative effects of interest rate hikes", it said. 

BAM added that it will also assess the impact of measures implemented by the government to support certain economic activities and citizens' purchasing power.

At its quarterly meeting, held on Tuesday, the council analysed the evolution of inflation, which reached 10.1% in February this year before having a downward curve to stand at 7.8% year-on-year in April and 7.1% at the end of May. 

The annual rate of inflation will stand at 6.2% this year (up from 6.6% in 2022) and will be 3.8% in 2024, according to central bank estimates. 

In addition, the Central Bank forecasts a limited GDP growth rate of 1.6% in view of the expected cereal production of 5.5 million tonnes due to the drought affecting the Maghreb country, and a public deficit of 5%.