Morocco’s central bank, Bank al-Maghrib, has reduced its benchmark interest rate by 25 basis points to 2.5%, making it the second rate cut this year.
The decision was made during the bank’s latest quarterly policy meeting. It reflects efforts to support large-scale investments, including preparations for co-hosting the 2030 FIFA World Cup with Spain and Portugal.
This adjustment comes as inflation trends align with Morocco’s price stability objectives, allowing the central bank to adopt a more accommodative monetary stance.
Inflation is projected to average 1% in 2024, a sharp drop from 6.1% in 2023, before slightly increasing to 2.4% in 2025. Despite this progress, ongoing drought conditions continue to challenge the agricultural sector, which is expected to contract by 4.6% this year.
Morocco’s economic growth forecast has been revised downward to 2.6% for 2024, compared to 3.4% in 2023. However, growth is expected to rebound to 3.9% by 2025 and 2026, driven by improvements in agriculture and non-agricultural sectors.
The rate cut is also aimed at easing borrowing costs for a $100 billion investment package that includes World Cup infrastructure, seawater desalination plants, renewable energy projects, and reconstruction efforts in areas affected by the 2023 Al Haouz earthquake. Development initiatives in the Western Sahara region are also part of the plan.
Despite challenges in agriculture, Morocco’s tourism sector has shown resilience, with 15.9 million visitors recorded in the first eleven months of 2024, surpassing expectations. Additionally, the country’s budget deficit has narrowed, contributing to overall economic stability.
Experts anticipate further rate cuts in 2025 as the central bank continues to navigate economic uncertainties.
While drought poses a significant risk to agricultural output and exports, sectors such as automotive manufacturing and phosphate production are expected to boost trade performance in the coming years.
