Wednesday, October 13, 2021

Morocco holds rate, raises inflation & growth forecast

     Morocco's central bank left its policy rate steady, and while it said monetary policy rate remains largely accommodative to ensure adequate financing conditions, it raised its forecast for inflation and growth.
     The Bank of Morocco, or Bank Al-Maghrib (BAM), maintained its policy rate at 1.5 percent, unchanged since June 2020 when it was lowered for the second time for cuts totaling 75 basis points to support economic activity during the COVID-19 pandemic.
     The board of BAM, which postponed its third monetary policy meeting from Sept. 28 until today due to health reasons, noted Morocco's progress in rolling out vaccinations, the continued recovery of economic activity and the trend toward moderate inflation despite a rise in external inflationary pressures.
     After rising to 2.2 percent in August, Morocco's headline inflation eased to 0.8 percent in August as the cost of food products declined.
     BAM forecast headline inflation should average 1.2 percent this year and underlying inflation should average 1.4 percent in the context of a recovery of domestic demand, rising energy prices and higher imported inflation.
     This forecast is up from BAM's forecast in June of 1.0 percent headline inflation this year and underlying inflation of 1.2 percent. 
     In 2020 headline inflation in Morocco averaged 0.7 percent and underlying inflation averaged 0.5 percent.
     For 2022 BAM forecast headline inflation of 1.6 percent and underlying inflation of 2.1 percent, up from June's forecast of 1.2 percent and 1.5 percent, respectively.
     Morocco's economy expanded by an annual 15.2 percent in the second quarter of this year, helped by 18.6 percent growth in agriculture and 14.8 percent in non-agriculture, after expanding 1.0 percent in the first quarter.
     "The recovery is expected to continue, supported by the notable progress in the vaccination campaign, the very good crop year, the fiscal stimulus as well as the accommodative monetary policy stance," BAM said.
     The central bank raised its forecast for gross domestic product growth this year to 6.2 percent from June's forecast of 5.3 percent 
     In 2022 the economy is expected to grow 3.0 percent compared with June's forecast of 3.3 percent.



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