Morocco: Threat of inflation looms as conflict in the Gulf persists

Morocco’s inflation was projected at a low 1.8%, and Bank Al-Maghrib, the central bank of Morocco, maintained its policy rate at 2.25%, with the rate expected to remain unchanged for the first half of 2026, according to the Moroccan government-friendly North Africa Post and agencies on March 9th.

However, conflict in the region, namely the US-Israel war on Iran, threatens these favourable conditions, as Bank Al-Maghrib is scheduled to hold its first monetary‑policy meeting of the year on March 17th.

Since US-Israeli strikes were launched against Iran on February 28th, Iran has retaliated with strikes targeting US military bases in countries including Saudi Arabia, Jordan and the United Arab Emirates.

Morocco’s growth was projected to reach nearly 5%, tax revenues were on the rise, led by VAT, foreign‑exchange reserves were ample, and tourism was looking at another boom.

Furthermore, US Secretary of Defence Pete Hegseth has reportedly told Israel that the US supports strikes against neighbouring Lebanon, while also approving a multi-million-dollar munitions sale to Israel.

The outbreak of war in the region disrupted the economy’s positive trajectory, with the Casablanca Stock Exchange registering a significant drop that erased gains from the previous semester.

Reportedly, the sensitivity of the country’s financial markets is due in part to the magnitude of this shock, supply disruptions, and the country’s reliance on imported energy, which is the main driver of the return of imported inflation.

Additionally, the blockade of oil through the Strait of Hormuz and production stoppages in the Middle East are driving up fuel and energy costs.

Other factors purported to affect the rate include disruptions in supply chains, which raise the costs of raw materials and food products.

Some economists have compared the recent shocks to “a Covid‑19 bis in motion,” marked by volatility, making comparisons to the oil shocks of 1973.

The central bank’s anticipated decision is complicated by the growing regional instability, forcing it to choose between tightening policy and immediately increasing interest rates or adopting a cautious approach in hopes of a near-end to the war.

The North Africa Post and agencies, Maghrebi.org