Bloomberg News

Morocco Central Bank Holds Interest Rate as Inflation Slows

June 14, 2011

(Updates with inflation forecast, bank comment starting in fifth paragraph.)

June 14 (Bloomberg) -- The Moroccan central bank held its benchmark interest rate at the lowest level in more than two years as prices declined.

The Rabat-based central bank, which meets every three months to review monetary policy, left its key rate at 3.25 percent, according to an e-mailed statement today.

“Inflation is low and growth is likely to be impacted by recent political developments,” Mohamed Abu Basha, an economist at EFG-Hermes Holding SAE, a Cairo-based investment bank, said in e-mailed comments. Abu Basha forecast the bank would keep the rate unchanged.

Demonstrations began in Morocco on Feb. 20 demanding more freedoms and an end to corruption, after revolts that unseated the leaders of Tunisia and Egypt. In April, the annual inflation rate was -0.3 percent, compared with 0.6 percent the month before. Morocco’s economy may expand 4.6 percent this year, compared with 3.3 percent in 2010, the state statistics office said in March.

Headline inflation may accelerate to 2.4 percent in the third quarter of 2012, the bank said in its statement. The inflation forecast for 2011 was revised down to 1.4 percent from the 2.1 percent forecast earlier, the bank said, citing a “sharp decline in food prices between January and April.”

Explaining its decision to maintain the rate, the bank said that “the central inflation forecast remains consistent with the price-stability objective and the balance of risks is slightly tilted to the upside.”

The central bank last changed its interest rate in March 2009, lowering it by quarter of a percentage point.

--With assistance from Alaa Shahine in Dubai. Editors: Ben Holland, Eddie Buckle

To contact the reporter on this story: Mariam Fam in Cairo at

To contact the editor responsible for this story: Andrew J. Barden at

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