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Economy

Bank Al-Maghrib Poised for Stability: Financial Experts Predict Continuity in Interest Rates

Monday 18 March 2024 - 09:40

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In a recent survey conducted by Attijari Global Research, a significant majority of influential investors in Morocco's financial market are foreseeing Bank Al-Maghrib (BAM), the nation's central bank, to uphold its benchmark interest rate at the current level of 3%. The survey, which engaged 35 key players, unveiled an overwhelming 98% consensus in favor of this projection, indicating a robust confidence in the stability of Morocco's monetary policy.

Benchmark interest rates serve as a critical tool for banks and financial institutions, shaping the cost of borrowing money and influencing the interest rates extended to consumers and businesses. Increases in these rates by central banks typically translate into higher borrowing costs, potentially tempering economic growth to mitigate inflationary pressures.

The survey's results, compiled prior to BAM's impending monetary policy meeting scheduled for March 19, 2024, strongly indicate a high probability of continuity in the benchmark rate. Significantly, a mere 2% of respondents envisaged a potential 25 basis point reduction.

The report highlights the steadfast confidence exhibited by both local institutions and key market participants, with probabilities of 97% and 98%, respectively, favoring an unaltered benchmark interest rate.

BAM has adhered to a consistent stance on benchmark interest rates for the past two quarters, a strategic measure widely perceived as supportive of Morocco's ambitious reconstruction endeavors following the devastating September 8 earthquake.

The market's confidence in interest rate stability is further underpinned by the alleviation of inflationary pressures. By the end of January 2024, inflation registered a modest increase of 2.4%, signaling a promising trajectory for economic recovery compared to the 6.1% average at the close of 2023. According to a report from HCP, as external pressures continue to diminish throughout 2024, Morocco's inflation is anticipated to further decline, averaging 2.3% for the year, edging closer to the targeted 2% mark.

Against this backdrop of cautious optimism, financial experts envision Bank Al-Maghrib's firm grip on the reins, maintaining the benchmark interest rate to cultivate a stable and conducive environment conducive for Morocco's economic revitalization and reconstruction efforts.