By Mahmoud Kassem and Mariam Fam
(Updates with central bank’s comment from third paragraph.)
Dec. 20 (Bloomberg) — Morocco’s central bank said it held its benchmark interest rate at the lowest level in more than two years as inflation remains “moderate” and amid concern about worsening growth prospects globally.
The Rabat-based bank, which meets every three months to review monetary policy, left the key rate at 3.25 percent, according to a statement on its website today.
“In this context, where the central inflation forecast is permanently consistent with the price-stability objective and the balance of risks is tilted to the downside, in conjunction with international developments, the board decided to keep the key rate unchanged at 3.25 percent,” the bank said.
Demonstrations began in Morocco on Feb. 20 to demand more freedom and an end to corruption, after revolts that unseated the leaders of Tunisia and Egypt. Morocco’s main Islamist group, the Justice and Development Party, last month won the biggest bloc in elections that will test King Mohammed VI’s commitment to shift some royal powers to an elected premier.
“We have recently downgraded our 2012 real GDP forecast for the Moroccan economy from 4.3 percent to 4.1 percent on the back of a deteriorating euro-area growth outlook,” Alia Moubayed, London-based senior economist at Barclays Capital, said in an e-mailed response to questions. “The weakening of external demand, however, is likely to be offset by an anticipated increase in domestic demand through an anticipated boost to public and private consumption and spending, supported by increasing public spending next year. We expect tourism to continue to perform relatively well compared to other countries in the region.”
Annual Inflation
Consumer prices increased an annual 0.5 percent in November after falling 0.4 percent in the previous month.
“The board noted that inflation remained moderate, in line with the assessment made at its September meeting,” the central bank said.
Finance Minister Salaheddine Mezouar said on Dec. 12 that he expects economic growth to be between 4.7 percent and 4.8 percent in 2012.
“Internationally, growth forecasts were revised downward in most countries, and the risks of recession in our main partner countries have increased significantly,” the bank said.
The central bank last changed its interest rate in March 2009, lowering it by quarter of a percentage point.
–Editor: Digby Lidstone, Heather Langan, James Hertling
To contact the reporter responsible for this story: Mahmoud Kassem at mkassem1@bloomberg.net
To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.
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