Gulf Today
Reuters
Morocco’s Central Bank (CB) held its benchmark interest rate at 2.25 per cent, saying its inflation forecast remained consistent with its price stability objective even as it forecast a jump in economic growth in 2017.
The central bank said it expected inflation to remain at around 1.6 per cent in 2016 and fall to 1.2 per cent in 2017.
Anticipating a rebound in agricultural output in 2017 from the worst drought in decades to hit North Africa, the bank said growth would jump to 4 per cent next year from an estimated 1.4 per cent in 2016. It had previously forecast 1.2 per cent growth for 2016.
The bank lowered its key rate to 2.25 per cent from 2.5 per cent in March, its first cut in more than a year, to support the economy, about 15 per cent of which is farming.
The bank had been preparing to introduce a flexible exchange rate system in the early part of 2017 but Governor Abdellatif Jouahri said that change will be postponed until the second half of 2017 to give more preparation time.
“We will launch an awareness campaign to explain to different players including the finance ministry, banks, media and others that it is a structural turning point,” he told reporters.
Morocco has done more than most North African countries to make reforms required by international lenders to curb deficits, such as an end to fuel subsidies and a freeze on public sector hiring. The Rabat government still controls wheat and cooking gas prices.
Reuters
