Morocco central bank expected to hold key interest rate steady

Morocco’s central bank is likely to hold its benchmark interest rate at 2.25 percent when its policy-making council holds its next meeting on March 17, amid increasing geopolitical tensions in the Middle East, according to North Africa Post on March 16th, a Moroccan government-friendly outlet.

In a survey of analysts and institutional investors conducted by BMCE Capital Global Research, all respondents to the survey expect Bank Al-Maghrib to hold the key rate at its next meeting, marking the fourth consecutive hold in the present monetary policy cycle.

In the survey, a majority of respondents, approximately 86 percent, expect that there will be no further interest rate cuts throughout the remainder of 2026. Only a minority of investors expect a single rate cut to be implemented in the coming months, indicating that the central bank’s present policy stance is viewed as adequate in the present economic environment.

Domestic economic indicators could, in principle, warrant a more accommodative monetary policy. In January 2026, consumer price inflation fell by 0.8 percent year-over-year, briefly dipping into negative territory. Bank Al-Maghrib expects average consumer price inflation in 2026 to come in at approximately 1.3 percent.

Morocco’s economic growth rate has also been relatively robust. The country’s economic growth rate was around 5 per cent in 2025 and is expected to dip slightly to around 4.5 percent in 2026. This growth rate will be driven by better agricultural output and continued strength in non-farm sectors. Bank lending has also continued to rise, increasing more than 8 per cent over the past year through January, while average lending rates have been steadily decreasing.

However, geopolitical developments have significantly impacted the monetary policy. The rising tensions between the United States, Israel, and Iran are seen to have increased the instability of the Strait of Hormuz, which is a strategic chokepoint through which global energy supplies pass. For Morocco, which is a net energy importer, rising oil prices are seen to drive up inflation as domestic inflation will rise due to increased transport costs and imported inputs.

According to BMCE Capital’s projections, a moderate escalation of tensions that keeps Brent crude prices above $85 will shave 0.4 percentage points off Morocco’s economic growth rate while pushing inflation to 2 percent. A more prolonged conflict will also weigh more heavily on the economy, shaving up to one percentage point off economic growth and pushing inflation to 3 to 4 percent.

In light of these developments, maintaining the current interest rate appears to be the most prudent option for the central bank, as it will allow it to respond to potential economic conditions that might worsen globally.

 

North Africa Post, Maghrebi.org