It is the first change in rates by the Bank of Morocco since March 2012. The bank issued the following statement:
"Rabat, September 23, 2014
1. The Board of Bank Al-Maghrib held its quarterly meeting on Tuesday,
2. During this meeting, the Board
developments and inflation forecasts up to the fourth quarter of 2015.
3. The Board noted that global
by stronger growth in the United States from 1.9 to 2.
Kingdom from 3 to 3.2 percent
In emerging economies,
its second consecutive quarterly
its global growth forecast for 2014 from 3.7
for 2015. In the labor market, the unemployment rate fell slightly in the United States,
6.2 percent in June to 6.1
Commodity prices broadly trended downward
monthly rate of 4.7 percent
inflation declined in most advanced
serious risk of deflation.
September decreased the
to 0.05 percent and that
announced that it would
support credit market and growth.
its asset purchase program
rate near zero for a considerable period of time
these developments suggest muted
4. Domestically, economic growth decelerated to 1.7
increase of 2.2 percent
agricultural value added.
economic activity would
increase of almost 3 percent
the agricultural value added.
Nonagricultural output gap would
quarters, suggesting the absence of
MAGHRIB BOARD MEETING
Maghrib held its quarterly meeting on Tuesday, September 23
he Board examined recent economic, monetary and financial
developments and inflation forecasts up to the fourth quarter of 2015.
global economic conditions in the second quarter 2014
growth in the United States from 1.9 to 2.5 percent as well as in
percent, and a slowdown in the euro area from
, growth accelerated in China and India while Brazil
its second consecutive quarterly contraction. In terms of outlook, the IMF in July
growth forecast for 2014 from 3.7 to 3.4 percent and maintained
n the labor market, the unemployment rate fell slightly in the United States,
6.1 percent in July, and stabilized at 11.5 percent
broadly trended downward; particularly, the price of Brent
percent in August to $101.9 a barrel on average
declined in most advanced economies, mainly in the euro
serious risk of deflation. Against this background, the European
interest rate on the main refinancing operations
that on the deposit facility from -0.10 to -0.20 percent. It also
that it would conduct a series of targeted longer-term refinancing operations
support credit market and growth. The U.S. Federal Reserve further reduced
its asset purchase program by $10 billion and reiterated its commitment to keep its
considerable period of time after the end of the program.
suggest muted external inflationary pressures in the
economic growth decelerated to 1.7 percent in the first quarter 2014, with an
percent in nonagricultural GDP and a decrease of 1.6
agricultural value added. Considering recent change in available sub
would expand by about 2.5 percent for the full year
percent in nonagricultural GDP and a decrease of nearly
the agricultural value added. Labor market data for the second quarter indicate
reached 9.3 percent, up 0.5 point from the same period of 2013.
onagricultural output gap would be negative and is expected to remain so in the
the absence of demand-led inflationary pressures.
5. Concerning external accounts, the trade deficit in goods narrowed by 3.1 percent to end of
August, as exports jumped by 7.1 percent owing mostly to strong growth in automotive
sector shipments and less rapid decline in sales of phosphates and derivatives. Despite the
32.2 percent increase in wheat purchases, imports edged up by a mere 1.8 percent because
of respective declines by 1.4 percent and 5.6 percent in energy and capital goods purchases.
With regard to other current account items, travel receipts improved by 3.0 percent to 40
billion dirhams, and transfers of Moroccan expatriates stabilized at 39.5 billion. Taking
account of these developments and revenues from grants, the current account deficit
would shrink from 7.6 percent of GDP in 2013 to 6.7 percent in 2014. On the capital
account side, net foreign direct investment inflows fell by 9.4 percent. Altogether, the stock
of net international reserves stood at 175.6 billion dirhams to end of August, equivalent to
4 months and 29 days of goods and services’ imports. It would remain at this level by the
end of 2014.
6. As regards public finance, fiscal deficit -excluding privatization proceeds- reached 42.5
billion dirhams to end of August 2014, as against 42.2 billion in the same period of last
year. Current receipts showed an increase of 3.8 percent, driven mainly by a rise of 3.4
percent in tax revenues and 6.4 billion in grants. Investment expenditure grew by 17.3
percent while ordinary expenses rose slightly by 0.6 percent to 159.9 billion dirhams. The
change in the latter conceals a decrease of 19.7 percent in subsidy costs and a hike of 17.8
percent in expenses of other goods and services and of 0.9 percent in the wage bill. Given
these developments, the objective of a budget deficit at 4.9 percent of GDP in 2014 would
7. Monetary data for July show a slowdown in bank lending, from 4.2 percent on average in
the second quarter to 3.9 percent in July, and an increase in the M3 aggregate of no more
than 3.5 percent, as against 4.2 percent. The money gap is thus negative, indicating the
absence of money-driven inflationary pressures. On the interbank market, the weighted
average rate stabilized at 3.01 percent on average in July and August, whereas the average
lending rate remained almost unchanged at 5.98 percent during the second quarter. The
effective exchange rate of the dirham in the second quarter depreciated at a quarterly rate
of 0.37 percent in nominal terms and 1.57 percent in real terms.
8. On the property market, the real estate price index further declined at a quarterly rate of 1.3
percent in the second quarter, after losing 0.2 percent a quarter earlier. By category, land
and commercial property prices fell respectively by 3 percent and 3.3 percent, while
residential property prices were down 0.1 percent compared to 0.4 percent in the previous
9. Under these conditions, after rising 0.4 percent year on year in July, the consumer price
index held steady in August, reflecting a deeper decline in volatile food prices from 7.1 to
9.9 percent, which more than offset price increases by 12.8 percent in “water supply and
sanitation” and by 6.5 percent in electricity. Over the first eight months of the year,
inflation reached 0.3 percent and its underlying component was at 1.2 percent on average.
The latter fell from 1.4 percent in July to 1 percent in August, owing to the slower price
rise in tradables from 1.4 to 0.8 percent and in nontradables from 1.6 to 1 percent.
Industrial producer prices continued to trend downward, with a further annual decline of
2.1 percent in July after that of 1.9 percent on average in the second quarter.
10. In light of these developments and taking into account the review of the water and
electricity pricing system starting from August, inflation is expected at 0.7 percent in 2014, 1.6 percent on average over the next six quarters, and 1.9 percent at the end of the forecast
horizon, with an even balance of risks.
11. In this context, where nonagricultural growth continues to be weak, international reserves
are improving and the central inflation forecast is consistent with the price stability
objective, the Board decided to lower the key rate from 3 to 2.75 percent, while continuing
to closely monitor all these developments. "