Bank Al-Maghrib (BAM) is expected to lower its key interest rate to 2.25% in 2025, according to Attijari Global Research (AGR). This anticipated reduction follows a recent 25 basis point cut, bringing the rate to 2.5% by the end of 2024, a level not seen since December 2022. The decision is driven by a meaningful decrease in inflation, which fell to 0.7% in October 2024 from a peak of 10% in Febuary 2023. Experts believe that this accommodative monetary policy will enhance investment in Morocco, notably as the country faces challenges such as post-earthquake reconstruction and preparations for the 2030 world Cup. With projected public investment reaching 1.7 trillion MAD from 2025 to 2030, the economic outlook remains cautiously optimistic.
Interview: Economic Outlook for Morocco with Attijari Global Research Expert
Editor: Welcome, and thank you for joining us today too discuss the anticipated changes in bank Al-Maghrib’s interest rates and the overall economic outlook for Morocco. To begin, could you explain the recent adjustments made to the benchmark interest rate?
Expert: Certainly! Recently, Bank Al-Maghrib lowered its key interest rate to 2.5%, following a 25 basis point cut. This adjustment is the first important change since December 2022 and is reflective of the substantial decline in inflation, now at just 0.7% as of October 2024,down from a staggering peak of 10% in February 2023. This shift is designed to foster an environment conducive to investment and growth.
Editor: That’s quite a decrease in inflation and a notable adjustment in monetary policy. What does this mean for investors and businesses in Morocco?
Expert: The reduction in the benchmark interest rate is expected to positively impact investment across various sectors. By lowering the cost of borrowing, Bank Al-Maghrib is aiming to stimulate economic activity and encourage businesses to invest, particularly as Morocco navigates post-earthquake reconstruction efforts and prepares to host the 2030 World Cup. With projected public investments reaching 1.7 trillion MAD from 2025 to 2030, these efforts will create numerous opportunities for local and foreign investors alike.
Editor: Can you elaborate on how the current monetary policy interacts with these critical infrastructure projects?
Expert: Absolutely. The accommodative monetary policy established by the central bank is strategically timed. By reducing interest rates, the central bank is facilitating access to credit for construction and advancement projects necessary for post-earthquake recovery. This move is crucial as it aligns with national priorities. Additionally,the focus on infrastructure development for the World Cup will likely attract more foreign direct investment,as global stakeholders look to capitalize on Morocco’s burgeoning economy.
Editor: Given the projection that the interest rate may drop to 2.25% in 2025, what are the future implications for the Moroccan economy?
Expert: Lowering the interest rate to 2.25% would be a strong endorsement of the central bank’s commitment to sustaining economic growth, especially post-pandemic and post-earthquake. Continued low rates can enhance business confidence and stimulate consumer spending, further driving economic recovery. However, this needs to be balanced against inflationary pressures that could arise if the economy grows too quickly. The central bank will need to remain flexible and responsive to these dynamics to ensure long-term stability.
Editor: As we look ahead, what practical advice would you give to businesses considering investments in Morocco during this period of economic adjustment?
Expert: My advice for businesses is to stay informed about economic indicators and central bank policies. With the current environment promoting lower interest rates, now is an excellent time to secure funding for projects. Additionally,aligning your business with national development goals,such as those related to the 2030 World Cup,could provide strategic advantages.Establishing partnerships with local firms and being part of the community’s recovery efforts can also be beneficial, ensuring that your business not only thrives but contributes positively to Morocco’s growth trajectory.
Editor: Thank you for sharing these insights. It truly seems that while challenges remain, the outlook for Morocco’s economy is cautiously optimistic with significant opportunities ahead.
Expert: Absolutely, the key will be to leverage the current monetary policies effectively while remaining adaptable to evolving economic conditions.
This discussion highlights how Bank Al-Maghrib’s policy changes can create a favorable environment for investment and economic growth,especially during these transformative times for Morocco.