Morocco's central bank left its key policy rate steady at 2.50 percent, citing a forecast for inflation to remain in line with its objective of prices stability amidst the uncertain outlook on the national and international level.
The Bank of Morocco, which has not changed its rate this year but cut it by 50 basis points in 2014, also forecast that inflation will average 1.6 percent this year - below its September forecast of 1.8 percent - and then ease further to 1.2 percent in 2016 and reach 1.5 percent at the end of its forecast horizon of the first quarter of 2017.
This forecast, however, does not take into account changes in sugar from Jan. 1, 2016, which should add 0.27 point to inflation in 2016 and 0.48 point in first quarter 2017.
Morocco's inflation rate eased to 0.9 percent in November, continuing the deceleration since hitting a year-high of 2.4 percent in July, mainly due to a deceleration in core inflation to 0.9 percent from 1.4 percent as last year's impact of higher cereal prices dissipates along with a drop in the growth rate of food prices to 4.7 percent from 6.3 percent, the bank said.
Morocco's economy has been improving due to better cereal production, the bank said, forecasting growth of 4.5 percent for this year, up from 2.4 percent in 2014 but below its previous forecast of 5.0 percent, based on growth of 14.6 percent of agriculture and 3.3 percent in non-agricultural Gross Domestic Product.
But for 2016 the central bank lowered its growth forecast to 2.1 percent due to a deceleration in the growth of the non-agricultural sector to 2.7 percent and a contraction in agriculture valued added of 4.3 percent.
In the third quarter of this year, Morocco's GDP expanded by an annual rate of 4.5 percent, up from 4.3 percent in the second quarter and the International Monetary Fund earlier this month forecast growth this year of 4.7 percent and 3.1 percent in 2016.
Morocco's dirham, which depreciated in the second half of 2015 through to early March, fell further in October and November but has remained more stable this month and was trading at 8.96 to the U.S. dollar today, down just over 1 percent this year.
In the third quarter, the central bank said the dirham appreciated by 1.5 percent in real terms based on a 0.9 percent appreciation in nominal terms due to higher inflation in Morocco than is main trading partners and competitors.
In April the central bank rebalanced the weights of the euro and dollar in the basket to which the dirham is pegged to reflect the weakening of the euro against the dollar, a move the bank described as a "first step in the transition toward a more flexible exchange rate regime" that is aimed at strengthening the competitiveness of Morocco and making it more resilient to external shocks.
The weighting of the U.S. dollar in the basked was doubled to 40 percent while the weighting of the euro was cut by a quarter to 60 percent.
Moroccos' external imbalances have fallen substantially in recent quarters on a lower oil import bill while exports of phosphate and other industries has improved along with strong remittances that helped offset declining tourism revenue.
The central bank forecast a 2015 current account deficit of 2.2 percent of GDP, falling further to around 1 percent next year, based on average oil prices of US$52.5 this year and $51.4 in 2016. The IMF forecast a current account shortfall of 1.5 percent this year, down from 5.7 percent in 2014.
The central bank also said the government deficit for this year was expected to be in line with the objective of 4.3 percent of GDP, down from 4.9 percent in 2014, helped by a 6.7 percent fall in ordinary expenses.