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Bank Al-Maghrib Lowers Interest Rates to 2.75% Amid Inflation Decline

Wednesday 26 June 2024 - 11:10
Bank Al-Maghrib Lowers Interest Rates to 2.75% Amid Inflation Decline

In a significant monetary policy shift, Morocco’s central bank, Bank Al-Maghrib, has announced a 25 basis point reduction in its benchmark interest rate, bringing it down to 2.75%. This move, marking the first rate change in over a year, comes on the heels of a notable decline in inflation pressures within the country.

The decision was revealed following the central bank’s quarterly meeting on Tuesday, indicating a strategic response as domestic inflation trends closer to the target rate of 2%.

Benchmark interest rates are crucial as they influence borrowing costs for financial institutions. Typically, higher rates lead to more expensive loans for consumers, a mechanism central banks use to control inflation. However, with inflation showing signs of easing, Bank Al-Maghrib has opted for a rate cut.

“After reaching 6.6% in 2022 and 6.1% in 2023, domestic inflation has returned to low levels in recent months,” the bank stated in an official release.

The reduction in inflation is largely attributed to easing external pressures and a drop in the prices of volatile food commodities. Bank Al-Maghrib projects that inflation will average 1.5% by the end of the year.

Additionally, the government’s contentious plan to eliminate state subsidies on basic food and energy commodities is anticipated to further mitigate inflationary pressures.

Looking ahead, the central bank forecasts a global decline in inflation rates, predicting a decrease from 4.7% in 2023 to 3.5% in 2024, and subsequently to 3.1% in 2025.

In Morocco, inflation is projected to peak at 2.7% in 2025, influenced by external factors such as the ongoing conflict in Ukraine and the Middle East crisis.

Similarly, inflation in the Euro area is expected to drop from 5.4% to 2.5% and then to 2.2%, while in the United States, projections indicate a decline from 4.1% to 3.3% and later to 2.7%.


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