Morocco hikes interest rates to slow down inflation

Morocco’s central bank on Tuesday raised interest rates by 50 basis points to 2.0 percent in an effort to slow down a surge in inflation.

The Bank Al-Magrib (BAM), after a board meeting, said the economy remains “deeply marked by the aftermath of the (coronavirus) pandemic and the implications of the war in Ukraine”, especially higher energy and food prices as well as supply chain disruptions.

“These developments are driving inflation to exceptionally high levels,” BAM said in a statement.

The central bank said the Moroccan economy was also suffering from “a particularly severe drought, along with a pronounced deceleration in growth and a sharp acceleration in inflation”.

BAM forecast that inflation would reach a monthly average of 6.3 percent by the end of 2022, compared with 1.4 percent last year, before easing back to 2.4 percent in 2023.

Growth in Morocco’s heavily agriculture- and fishing-dependent economy is expected to “slow down markedly” this year to 0.8 percent, compared with 7.9 percent last year, it said.