Morocco's central bank kept its key policy rate steady at 2.50 percent, citing inflation that is in line with its objective along with external uncertainties, in particular the trend in oil prices.
The Bank of Morocco, which cut its rate by 50 basis points in 2014, forecast that inflation would average 1.5 percent this year and average 1.4 percent over the next six quarters.
In April Morocco's inflation rate rose to 1.7 percent from 1.6 percent in March, mainly due to a 3.3 percent rise in food prices compared with a first quarter average of 2.4 percent. Core inflation remained stable at 1.4 percent though industrial producer prices dropped by an annual 5.1 percent in April, slightly less than the average 59 percent drop in the first quarter.
The central bank confirmed its forecast for Morocco's economy to expand by 5.0 percent this year, the same as it forecast in March. Morocco's Gross Domestic Product expanded by 2.4 percent in 2014 according to data based on the new base year of 2007, which replaces 1998 as base year.
Growth this year is expected to be driven by a nearly 15 percent rise in agriculture valued added while non-agricultural activity will accelerate to around 3.5 percent.
"Under these circumstances, nonagricultural output gap continued to be negative and would remain so in the medium term, suggesting the absence of demand-driven inflationary pressures," the central bank said.
Morocco's foreign exchange reserves reached 194 billion dirhams by end-May, the equivalent of 5 months and 25 days of goods and services imports. The reserves are expected to further improve to cover around 6 months of imports by the end of the year, the central bank said.