Morocco maintains rate 2nd time amid drought, virus

     Morocco's central bank left its key interest rate steady for the second time, saying the current accommodative monetary policy stance remains appropriate in light of the double shock to the economy this year from the COVID-19 pandemic and drought.

     The Bank of Morocco, or Bank Al-Maghrib (BAM), maintained its policy rate at 1.5 percent, as in its previous meeting in September, after cutting it twice this year by a total of 75 basis points following cuts in March and June.

     Morocco has been hit by a double shock this year, both the pandemic and persistent drought that hit farm crops, with the government easing its fiscal policy to minimize the economic and social impact.

    "On the national level, data for the last two quarters illustrate the extent of the double shock suffered by the national economy due to the pandemic and unfavorable climate conditions that marked the previous agricultural season," the central bank said.

     Morocco's gross domestic product contracted 14.9 percent in the first quarter year-on-year after 0.1 percent growth in the first quarter, with non-agricultural activities shrinking 15.5 percent and valued added in agriculture down 6.9 percent.

     The labour market has also been hit hard, with the unemployment rate rising to 12.7 percent in the third quarter from 12.3 percent in the second quarter, for the highest rate since the fourth quarter of 2001.

     BAM now expects the economy to contract 6.6 percent this year, up from its September forecast of 6.3 percent and the June forecast of 5.2 percent, as the recovery from the second quarter is expected to remain slow and only partial amid a new surge in infections.

     In the medium term, an improvement in household income and measures to support investment, the output of non-agricultural actives should reach 3.3 percent in 2021 and 3.6 percent in 2022.

     Agricultural output is also expected to bounce back, growing 13.8 percent next year and 2.0 percent in 2022.

      Overall, the economy is seen expanding 4.7 percent in 2021 and then 3.5 percent in 2022, though BAM cautioned the forecast remains surrounded by a high degree of uncertainty.

      But the balance of risks are to the upside, the bank said, pointing to the beginning of COVID-19 vaccinations and the establishment of a strategic fund dedicated to investment.

      Last month the International Monetary Fund (IMF) forecast Morocco's economy would shrink between 6 and 7 percent this year, depending on the extent of the virus, but then rebound and expand 4.5 percent in 2021 as the impact of the drought and pandemic wanes.

     Although Morocco's fiscal and external deficits are set to widen this year due to lower tax receipts and tourism revenue, the IMF said the resilience of remittances and lower imports have contained its needs and its international reserves remain comfortably above last year, helped by IMF's precautionary liquidity line in April and the country's access to external financing.

     And while the economic recovery is sluggish, inflation has accelerated sharply in the last three months, mainly due to higher food prices. 

     After inflation was negative May through July, it rose in August and September to 1.3 percent in October.

     BAM forecast inflation should average 0.7 percent this year, up from its September forecast of 0.4 percent, and then remain almost stable in 2021 before rising to 1.3 percent in 2022 as demand improves.

     www.CentralBankNews.info

   

Morocco maintains rate as inflation now seen rebounding

     Morocco's central bank left its monetary policy rate steady at 2.25 percent and confirmed its forecast from March that inflation should average 0.6 percent this year and raised its forecast for 2020 inflation to average 1.2 percent from an earlier 1.1 percent due to an expected recovery in domestic demand.
      The Bank of Morocco, or Bank Al-Maghrib (BAM), has kept its rate steady since March 2016 and said inflation has remained low in the first four months of the year due to a decline in food prices and to a lesser extent prices of fuels and lubricants.
      Morocco's inflation rate rose to 0.2 percent in April but averaged minus 0.1 percent in the first four months, down from 1.9 percent in 2018.
      Next year inflation is expected to pick up as domestic demand is seen rising 1.5 percent, up from 0.8 percent in 2019, and 1.1 percent in 2018.
      Since June 2018 BAM had continuously lowered its inflation due to lower food prices and weak domestic demand.
      Morocco's economy slowed last year due to a general weakening of the global economy, with gross domestic product expanding 3.0 percent from 4.2 percent in 2017.
      BAM raised its forecast for 2019 growth to 2.8 percent from the March forecast of 2.7 percent and the 2020 growth forecast to 4.0 percent from 39 percent, helped by strong sales of phosphates and its derivatives, and a rebound in automotive sales as the PSA plant begins operations in the second half of 2020.
      Imports are expected to slow on lower energy and capital goods imports, and based on the assumption of Gulf states grants of 2 billion dirhams in 2019 and 1.8 billion in 2020, the current account deficit should narrow to 3.1 percent of GDP in 2020 from 4.5 percent in 2019 and 5.5 percent in 2018.

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Morocco holds rate but lowers inflation forecast again

     Morocco's central bank left its monetary policy rate at 2.25 percent but again lowered its outlook for economic growth and inflation amidst a continued slowdown in the global economy and an uncertain outlook due to trade, geopolitical tensions and Brexit.
     The Bank of Morocco, or Bank Al-Maghrib (BAM), has kept its rate at the current level since March 2016.
      Morocco's inflation rate averaged 1.9 percent in 2018, up from 0.7 percent in 2017, but BAM expects headline inflation to average 0.6 percent this year before rebounding to 1.1 percent in 2020, driven by an expected rise in core inflation to 0.8 percent in 2019 and 1.4 percent in 2020 on an expected rise in domestic demand.
     In January Morocco's consumer prices fell 0.5 percent year-on-year, the first case of deflation since July 2017, due to lower prices of food and non-alcoholic beverages, and transport.
     Since June last year BAM has continuously lowered its inflation forecasts and in December it forecast 2.0 percent inflation for 2018, 1.0 percent for 2019 and 1.2 percent for 2020.
     Morocco's economy slowed more than expected last year, with gross domestic product in the third quarter up by 3.0 percent, down from 3.9 percent a year earlier, and BAM projected average 2018 growth of 3.1 percent, down from 4.1 percent in 2017.
     In December last year BAM forecast average 3.3 percent growth for 2018, down from June's forecast of 3.6 percent and September's forecast of 3.5 percent.
     The slowdown in growth was mainly centered on the agricultural sector, with valued added slowing to growth of 4.3 percent from 15.4 percent in 2017, while non-agricultural activities grew 2.9 percent from 2.7 percent.
      Overall growth this year was forecast at 2.7 percent and then 3.9 percent in 2020, down from December's forecast of 3.1 percent growth in 2019 but the forecast for 2020 is higher than the previous forecast of 3.6 percent.
     Morocco's exports of goods improved last year but imports were marked by higher energy prices and capital goods' purchases, expanding the current account deficit to 5.2 percent of GDP from 3.6 percent in 2017.
     This year the deficit is seen narrowing to 4.1 percent and then 3.4 percent in 2020 due to an expected decline in energy imports and a slowdown in capital goods' purchases.
      Foreign Direct Investment inflows reached the equivalent of 4.1 percent of GDP in 2018 and are expected to drop to 3.4 percent in 2019 and in 2020.
      Helped by Gulf states' grants of 2 billion dirhams in 2019 and 1.8 billion in 2020, along with expected international borrowings by Morocco's Treasury, net international reserves are seen rising to 239 billion dirhams in 2019 from 231 billion in 2018 before falling to 236 billion in 2020, the equivalent of just over 5 months of imports.
      The real effective exchange rate of the dirham is expected to appreciate by 0.7 percent this year but then depreciate by 0.5 percent in 2020, BAM said.
      In December the International Monetary Fund board approved a precautionary, 2-year, US$2.97 billion line of credit for Morocco - similar to three previous arrangements - to provide Morocco with insurance against external risks and support the government's plans to reduce fiscal and external vulnerabilities and promote higher and more inclusive economic growth.

Morocco maintains rate, trims inflation, growth forecasts

      Morocco's central bank left its monetary policy rate steady at 2.25 percent and once again lowered its forecast for inflation and economic growth.
      The Bank of Morocco, or Bank Al-Maghrib (BAM), said inflation had edged down in the second half of this year after accelerating in the first half, dropping to 1.1 percent in October from 2.5 percent in June due to lower food prices.
      By year-end inflation is expected to average 2.0 percent for 2018, up from 0.7 percent in 2017, and then average 1.0 percent next year and 1.2 percent in 2020.
     Core inflation was forecast to average 1.1 percent this year, 1.0 percent in 2019 and 1.6 percent in 2020.
     This latest forecast continues the downward revision of inflation expectations for this year and for 2019 seen in June and September.
     In September BAM forecast headline inflation would average 2.1 percent this year, down from June's forecast of 2.4 percent and the March forecast of 1.8 percent as the shocks of higher commodity prices and regulated prices dissipate.
     BAM also forecast in September that 2019 headline inflation would average of 1.2 percent, down from June's forecast of 1.4 percent and March's forecast of 1.5 percent.
     Morocco's economy has been decelerating in the last four quarters and BAM forecast growth this year would average 3.3 percent, down from 4.1 percent in 2017 and September's forecast of 3.5 percent. In June BAM forecast growth this year of 3.6 percent.
     Next year growth is expected to slow further although non-agricultural activities are expanding.
     The economy is expected to expand by 3.1 percent in 2019 before picking up speed in 2020 to 3.6 percent growth. In the second quarter gross domestic product grew an annual 2.4 percent, down from 3.2 percent in the first quarter.
      Assuming an inflow of grants from Gulf states of 4.8 billion dirhams in 2018 and 2.0 billion in 2019, BAM expects Morocco's current account deficit to rise to 4.4 percent of GDP by the end of this year form 3.6 percent in 2017.
     But a rise in exports, led by the automotive sector and a fall in imports, the deficit is expected to ease to 3.7 percent in 2019 and then 3.2 percent in 2020.
     The real effective exchange rate of the dirham is expected to remain virtually stable this year and then appreciated by 1.6 percent in 2019 before dropping by 0.8 percent in 2020.
     Against the euro the dirham has risen steadily since April though it has given back some of its gains in the last few weeks. The dirham was trading at 10.88 to the euro today, up 2.9 percent this year.
     BAM's forecast for the government deficit for fiscal 2018 was unchanged at 3.7 percent of GDP, 3.8 percent in 2019 and 3.6 percent in 2020.
     The central bank's policy decision came the day after the International Monetary Fund's board approved a precautionary, 2-year, US$2.97 billion line of credit for Morocco - similar to three previous arrangements - to provide Morocco with insurance against external risks and support the government's plans to reduce fiscal and external vulnerabilities and promote higher and more inclusive economic growth..

Morocco maintains rate on moderate underlying inflation

      Morocco's central bank continued to keep its monetary policy rate at 2.25 percent, unchanged since March 2016, saying underlying inflation remains moderate despite the recent rise in headline inflation which is based on changes to the consumer price index along with higher prices of volatile food products and tariffs on regulated prices.
       Underlying inflation is forecast to average 1.1 percent this year and 1.6 percent in 2019, the Bank of Morocco, or Bank Al-Maghrib (BAM), said. This forecast is down from March when BAM forecast 2018 underlying inflation of 1.4 percent and 1.9 percent in 2019.
      Morocco's headline inflation rate rose to 2.7 percent in May from 2.5 percent in April and BAM expects inflation to average 2.4 percent this year and then ease to 1.4 percent in 2019.
      The forecast for 2018 headline inflation is sharply up from the previous forecast in March of 1.8 percent while the 2019 forecast is largely similar to the previous 1.5 percent forecast.
      After slowing in 2016, Morocco's economy recovered last year and is forecast to continue to expand this year on good agricultural production and improved non-agricultural activities.
      Last year Morocco's economy grew by 4.1 percent, up from 1.1 percent in 2016, and BAM forecast 3.6 percent growth this year and 3.1 percent in 2019.
      In March BAM raised its 2018 growth forecast to 3.3 percent from 3.0 percent but lowered its 2019 forecast to 3.5 percent from 3.6 percent.
      Exports from Morocco are expected to continue to rise this year, with exports and the automotive industry getting a boost next year from start of production at the Peugeot Citroen plant near Rabat which is planned to produce 100,000 cars next year before total output of 200,000 vehicles and 200,000 engines at its final stage.
     BAM forecast goods export to rise 5.8 percent this year and 6.9 percent in 2019, with tourism revenue up 8 percent this year and 4 percent in 2019.
      The current account deficit is seen easing to 3.6 percent of GDP in 20189 from 4.1 percent this year while foreign exchange reserves are seen ending this year at 255.4 billion dirhams and 245.9 billion by end-2019, enough for more than 5 months of imports.
      In January last year Morocco introduced a more flexible exchange rate system by widening the dirham's fluctuation band against hard currencies to 2.5 percent on either side from 0.3 percent for a total range of 5.0 percent.
      The dirham is mainly pegged to the euro but last year BAM reduced the euro weight to 60 percent from 80 percent and raised the U.S. dollar weighting to 40 percent from 20 percent.

      Today the dirham was trading at 9.54 to the U.S. dollar, down 2 percent this year, and at 11.06 to the euro, up 1.4 percent this year.

      www.CentralBankNews.info

Morocco maintains rate and raises growth forecast

      Morocco's central bank left its monetary policy rate at 2.25 percent, citing a positive reaction of financial markets and institutions to the introduction of a more flexible exchange rate system in January along with an improving economy and moderate inflation.
      The Bank of Morocco, or Bank Al-Maghrib (BAM), which has kept its rate steady since March 2016, raised its forecast for 2018 economic growth to 3.3 percent from December's forecast of 3.0 percent following growth in 2017 of 4.0 percent due to a 14.8 percent rebound in agriculture while non-agricultural output only rose by 2.7 percent.
      This year BAM expects a 2.3 percent rise in agriculture value added while non-agriculture output is expected to continue to rebound and rise by 3.2 percent.
       In 2019 overall growth is expected to accelerate to 3.5 percent, slightly down from December's forecast of 3.6 percent.
      Last year Morocco saw a strong improvement in exports, which rose 9.4 percent, while tourism receipts rebounded 8.5 percent and remittances from Moroccans abroad up 4.5 percent.
      At the same time imports rose 6.4 percent, driven by a 27.4 percent jump in the cost of energy imports, with the current account deficit narrowing to 3.8 percent of Gross Domestic Product from 4.4 percent.
       BAM expects exports to continue to rise and travel receipts are forecast to increase by 5.7 percent this year and 5.2 percent in 2019 while remittances should grow 5.0 percent and 4.1 percent, respectively.
       Imports are also expected to accelerate to growth of 7.1 percent this year before slowing to 4.2 percent in 2019, and the current account deficit should be around 4 percent in 2018 and 2019.
       Assuming foreign direct investment of around 4.4 percent of GDP in 2018 and 3.5 percent in 2019, foreign exchange reserves would amount to around 257.3 billion dirhams in 2018 and 244.4 billion in 2019, enough for 5 months and 26 days of imports and 5 months and 17 days, respectively.
       Morocco's inflation rate eased to 1.8 percent in January from 1.9 percent in December after 2017 inflation averaged only 0.7 percent due to a fall in food prices.
       "In the medium term inflation will increase while remaining at moderate levels," BAM said, forecasting 2018 inflation of 1.8 percent and 1.5 percent in 2019. Underlying inflation is forecast at 1.4 percent this year and 1.9 percent in 2019 due to a consolidation of domestic demand and a rise in imported inflation.
      On Jan. 15 Morocco introduced a more flexible exchange rate system by widening the dirham's fluctuation band to 2.5 percent on either side from 0.3 percent for a total range of 5.0 percent.
      The dirham is mainly pegged to the euro but last year BAM reduced the euro weight to 60 percent from 80 percent and raised the U.S. dollar weighing to 40 percent from 20 percent.
      Today the dirham was trading at 11.29 to the euro, down 0.7 percent this year.

     www.CentralBankNews.info

     

Morocco maintains rate as inflation trends higher

     Morocco's central bank left its monetary policy rate at 2.25 percent, noting the downward trend in inflation had been reversed and inflation is expected to average 0.7 percent this year, down from 1.6 percent in 2016, but then rise in 2018 to average 1.5 percent and 1.6 percent in 2019.
      The Bank of Morocco, or Bank Al-Maghrib (BAM), which has maintained its rate after cutting it by 25 basis points in March 2016, also forecast economic growth this year of 4.1 percent, down from June's forecast of 4.4 percent but up from 1.2 percent in 2016 when agricultural output shrank from drought.
      Next year Morocco's economy is expected to slow to 3.0 percent growth before accelerating to 3.6 percent in 2019, BAM added. 
      In the second quarter of this year, Morocco's economy grew by 4.2 percent, BAM said, up from 3.8 percent in the first quarter.

       Morocco's headline inflation rate rose to 0.6 percent in October for the third month in a row of a rise in consumer prices following a fall of 0.1 percent in July.

       The exchange rate of Morocco's dirham has risen sharply this year as the country prepares to float it, a move that is also supported by the International Monetary Fund, which in November said a transition to a more flexible exchange rate would help the country absorb external shocks and raise its competitiveness.

       "'With current conditions that continue to offer a window of opportunity to implement the transition in a gradual and orderly manner, starting the process as soon as possible would be appropriate," the IMF said on Nov. 7.

       The government had planned to float the dirham last year but then postponed it to ensure that all parties were prepared for such a move following the sharp fall in Egypt's pound following its float.

       The dirham was trading at 9.4 to the U.S. dollar today, up 7.6 percent this year.

      www.CentralBankNews.info

Morocco maintains rate, sees 2016 inflation of 1.6%

    Morocco's central bank maintained its key policy rate at 2.25 percent, saying inflation is forecast to remain in line with its objective and average 1.6 percent this year and 1.2 percent in 2017 due to "the dissipation of temporary shocks on volatile food prices which would more than offset the expected increase in core inflation."
    The Bank of Morocco, which cut its rate by 25 basis points in March due to a downward revision in inflation forecasts, added that foreign exchange reserves are expected to continue to increase - though at a slower rate than expected in June due to an expected decline in foreign investment - to equal imports of around 7 months and 6 days by the end of this year and 7 months and 20 days by the end of 2017.
    Morocco's inflation rate was steady at 1.6 percent in August and July.
    In June the central bank forecast headline inflation in 2017 of 1.0 percent.
    The exchange rate of Morocco's dirham depreciated by 0.61 percent in the second quarter, mainly due to a decline in the exchange rate against the euro, the bank said, adding that the real exchange rate fell by 0.78 percent as inflation in Morocco was lower than in partner countries.
    "For the full year 2016, it is expected to rise by 1.4 percent and to decline by 0.4 percent in 2017," the central bank added.
   The dirham was trading at 9.72 to the U.S. dollar today, up 2.06 percent this year.

Morocco holds rate, raises RRR and inflation forecast

    Morocco's central bank left its key policy rate at 2.25 percent as it revised upwards its forecast for inflation this year to 1.6 percent from 0.5 percent forecast in March due to a sharp rise in food prices.
   The Bank of Morocco, which in March cut its rate by 25 basis points due to a downward revision in inflation expectations and weak non-agricultural growth, added that it was raising the required reserve ratio (RRR) by 300 basis points to 5.0 percent due to improved bank liquidity and would start to pay interest on the required reserves of "banks making more efforts in terms of lending."
   While the forecast for headline inflation this year was revised upwards, the central bank said the forecast for core inflation this year remained "virtually unchanged" at 0.6 percent.
    Headline inflation in 2017 is seen easing to 1.0 percent, down from the previous forecast of 1.4 percent, as the shock of higher food prices dissipates while core inflation is seen rising along with fuel and lubricants.
    Morocco's consumer price inflation rate eased to 1.6 percent in April from 1.8 percent in March while Gross Domestic Product grew by an annual 4.7 percent in the final 2015 quarter for full-year growth of 4.5 percent due to a 12.8 percent rise in agriculture value added and a 3.5 percent increase in non-agricultural activities.
    For 2016 the central bank raised its growth forecast to 1.2 percent 1.0 percent seen in March as agricultural production was seen expanding more than expected in March - at 9.0 percent - while non-agricultural growth was seen rising 2.8 percent.
    For 2017 the central bank expects growth to accelerate to 4.0 percent as agricultural value-added is expected to rise 10 percent and non-agricultural out put by 3.2 percent.
    Helped by a continued strong performance of the country's automotive industry, the central bank said exports were up by 2.0 percent at the end of May, with the current account deficit seen easing to 2.0 percent of GDP this year and 0.8 percent in 2017.

Morocco cuts rate 25 bps, inflation falls, FX reserves rise

    Morocco's central bank cut its key policy rate by 25 basis points to 2.25 percent, citing a downward revision of its inflation forecast, weak non-agricultural growth, the continued reduction of the budget deficit and rising foreign exchange reserves.
    The Bank of Morocco, which had maintained its rate since cutting it by 25 basis points in December 2014, noted the downward trend in inflation in recent months and revised down its 2016 forecast to 0.5 percent from 1.6 percent forecast in December due to decelerating core inflation from slower domestic demand and low inflation in the euro area.
    In 2017 inflation is expected to rise to 1.4 percent due to higher core inflation and a rise in the prices of fuel and lubricants. This forecast doesn't reflect the removal of the sugar subsidy that has not yet been implemented. In December the central bank said the cut in sugar subsidies should add 0.27 point to inflation this year and 0.48 point in the first quarter of 2017.
   Morocco's headline inflation rate rose to 0.9 percent in February from January's 0.3 percent, the lowest point seen since 2.4 percent in July 2015. In 2015 inflation averaged 1.6 percent.
   Morocco's economy grew by an annual rate of 4.7 percent in the fourth quarter of last year, up from 4.5 percent in the third quarter, with the High Commission for Planning (BAM) estimating full year growth of 4.2 percent with non-agricultural output up by 3 percent as compared with a 14.6 percent increase in agriculture valued added due to a record cereal crop.
    For 2016 BAM is forecasting growth of 1.0 percent as agriculture output contracts by 13.8 percent, based on lower cereal output due to climate and vegetation data, and non-agricultural growth drops to 2.9 percent. In December the central bank forecast 2016 growth of 2.1 percent.
   But for 2017 Morocco's economy should accelerate and expand 3.9 percent, reflecting rises of 10.8 percent in agriculture valued added and a 3.1 percent rise in non-agricultural output.
    Morocco's current account deficit in 2015 was estimated by the central bank to have narrowed to 2.3 percent of Gross Domestic Product due to a 18.6 percent fall in the trade deficit from a 28.1 percent decline in the energy bill.
    Assuming average oil prices of $38.4 per barrel this year and $44.6 in 2017, the current account deficit is expected to ease further to 0.1 percent of GDP in 2016 and 0.3 percent in 2017, further strengthening foreign exchange reserves to import coverage of 7 months and 21 days by end-2016 and 8 months and 15 days end-2017 as compared to 6 months and 24 days in 2015.
    Data from the central bank shows that Morocco's foreign exchange reserves rose to 234.4 billion dirhams as of March 11 - or US$24.0 billion - up from 224.6 billion dirhams, or $22.7 billion, on Dec. 31, 2015.
   Data for Morocco's government shows a budget surplus in January after a deficit of 42.7 billion dirhams in 2015. Helped by low oil prices and grants from the Gulf Cooperation Council, the deficit should reach 3.7 percent of GDP in 2016 and 3.1 percent in 2017, the central bank said.

    www.CentralBankNews.info


 

Morocco holds rate, sees lower inflation and growth

      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.

    www.CentralBankNews.info

Morocco maintains rate, sees 2015 inflation of 1.8%

    Morocco's central bank left its key policy rate steady at 2.50 percent, saying inflation is expected to remain in line with its objective and hit an average of 1.8 percent this year and 1.5 percent over the next six quarters.
    The Bank of Morocco, which has left its rate unchanged this year, added that its decision to maintain its rate also took into consideration "the uncertainties still surround both the national and international outlook."
    Morocco's inflation rate eased to 1.7 percent in August from 2.4 percent in July, mainly reflecting a slower increase in prices of regulated goods, excluding fuel and lubricants.
    Core inflation edged up to 1.5 percent from 1.4 percent, with a slight acceleration in the prices of non tradable goods and a stability in the prices of tradable goods. Industrial producer prices continued to trend downwards, falling 3.7 percent in July, the bank said.

    www.CentralBankNews.info

Morocco holds rate on low inflation, 5% economic growth

    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.

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Morocco cuts rate 25 bps on "relatively low" inflation

    Morocco's central bank cut its key policy rate by another 25 basis points to 2.50 percent as inflation is expected to "remain relatively low," averaging 0.4 percent for 2014, 1.2 percent in 2015 and 1.3 percent in the first quarter of 2016.
   The Bank of Morocco, which has now cut its rate by 50 basis points this year, said the rate cut also took into account increases in minimum wages this July and in July 2015 along with the review of water and electricity prices, and projected oil prices.
    "Considering this central inflation forecast, the objective to reduce the fiscal deficit to sustainable levels and the continued improvement in foreign exchange reserves, and in order to further support economic recovery, the Board decided to lower again the key rate by 25 basis points to 2.5 percent," the central bank said.
    Morocco's consumer price inflation rate rose to 0.6 percent in October from 0.1 percent in September for a 0.3 percent decline in the first 10 months of this year compared with a 2.1 percent increase in the same 2013 period. This was mainly due to a 6.6 percent drop in food prices - compared with a 4.8 percent rise.
    Morocco's Gross Domestic Product expanded by an annual 2.3 percent in the second quarter of this year, up from a rate of 1.7 percent in the first quarter but down from 5.1 percent in the second quarter of 2013. The central bank attributed the lower growth rate this year to a 2.6 percent fall in agricultural value added after a rise of 20.2 percent last year.
    For the full year, GDP is estimated to expand by 2.5 percent and then by 4.4 percent in 2015, driven by a recovery in non-agriculture.
    Meanwhile, the unemployment rate in the third quarter rose 0.5 percentage points to 9.6 percent despite a 0.3 percent fall in the labour participation rate. The non-agricultural output gap is negative, suggesting the absence of demand-led inflation pressure, the central bank said.

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Morocco holds rate, encourages loans to small businesses

   Morocco's central bank held its key rate steady at 3.0 percent, saying inflation is expected to remain in line with the bank's price stability objective and the risks are balanced.
    Bank Al-Magrib also said it would implement a new program to encourage banks to lend to very small, small and medium-sized enterprises, particularly industrial companies that are export-oriented due to a continued deceleration in non-agricultural activity and bank credit.
    The program, with a minimum duration of two years, provides banks with liquidity collateralized mostly by private securities issued by such businesses, the Central Bank of Morocco said.
    Bank Al-Magrib trimmed its inflation forecast for 2013 to 2.1 percent from a March forecast of around 2.2 percent and maintained its forecast that inflation would be around 1.6 percent in the third quarter of 2014, averaging 2.0 percent over the forecast horizon.
    Morocco's inflation rate rose to 2.4 percent in April from 2.2 percent in March for an average rate of 2.4 percent in the first quarter, in line with the bank's forecast from March. Core inflation rose to 1.6 percent in April from 1.5 percent in March, mostly due to the dissipating effect of a cut in communications prices in 2012. Due to lower commodity prices, industrial producer prices fell by 4 percent in April after a 1 percent fall in March.

Morocco holds rate, inflation subdued but forecast raised

    Morocco's central bank held its key rate steady at 3.0 percent, saying inflation remains subdued -despite a raised forecast - and in line with its target.
    The board of Bank Al-Maghrib said inflation is forecast to remain around 2.2 percent in 2013 and 1.6 percent in the second quarter of 2014, averaging 2.0 percent over the forecast horizon, "broadly in line with the objective of price stability in the medium term."
     Morocco's inflation rate eased to 2.2 percent in February from 2.6 percent in January and December while core inflation, which reflects the fundamental trend of price, remained below 1 percent, the Central Bank of Morocco said.
    In December the central bank estimated 2013 inflation of 1.7 percent and 1.5 percent in Q1 2014.
    Morocco's central bank has held rates steady since March 2012 when it cut rates by 25 basis points.

Morocco keeps rate, sees inflation in line with objective

    Morocco's central bank kept its policy rate unchanged at 3.0 percent and expects inflation to average 1.7 percent over the next 1-1/2 years, in line with the bank's price stability objective.
     Bank Al-Maghrib, which has held its rate steady since March when it was cut by 25 basis points, said headline inflation should hover around 1.2 percent in 2012, 1.7 percent in 2013 and 1.5 percent in the first quarter of 2014.
    "In this context where the balance of risks is neutral and the central inflation forecast is permanently consistent with the price stability objective, the Board decided to keep the rate unchanged at 3 percent," the central bank said in a statement, repeating its statement from September.
    Morocco's headline inflation rate rose to 1.8 percent in October from September's 1.2 percent, but the bank said this was mainly due to a 5 percent rise in volatile food prices. Core inflation rose to 0.8 percent in October from 0.6 percent.