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Commercial Research: The Decision to Maintain the Interest Rate Reflects Bank of Morocco’s Caution and Desire to Solidify Decrease in Inflation
According to the latest report from “Commercial Research,” the decision by the Bank of Morocco to keep the key interest rate at 2.25 percent clearly indicates the central bank’s intent to safeguard the gains made in reducing inflation and to avoid any premature monetary easing. The center’s document titled “Monetary Policy 2025” explained that this monetary stability, which was anticipated by investors, marks the third consecutive instance in which the bank has maintained this level since its initial reduction in March of the same year, emphasizing that this approach occurs within a context of significantly controlled inflation.
Since the beginning of 2024, the consumer price index has shown a notable downward trend, reaching a level of 0.1 percent in October 2025. This prompted the Bank of Morocco to revise its inflation forecasts for 2025 downward to 0.8 percent, a level below the price stability target set at 2 percent. Alongside this price stability, the central bank raised its economic growth forecasts for the fourth consecutive time to 5 percent, the highest rate recorded since 2021, supported by a recovery in non-agricultural sectors and a surge in domestic demand bolstered by strong consumption and increasing public and private investment rates.
In terms of the transmission of monetary policy to the real economy, analysts noted a delay in the responsiveness of loan interest rates to the cumulative decrease in the key interest rate. The decline registered was 58 basis points compared to 75 basis points for the reference rate, which explains the central bank’s hesitance in taking new steps while awaiting a stronger impact on the market. The last quarter of 2025 also witnessed a slight correction upward in medium- and long-term interest rates, due to institutional investors’ shift towards more profitable assets and expectations of a longer period of monetary stability.
Regarding liquidity conditions, the report projected that the banking system’s needs would worsen, reaching a record level of 158 billion dirhams by 2027, driven by a continued rise in circulating cash, which surpassed 470 billion dirhams, despite maintaining a strong reserve of foreign currency exceeding 430 billion dirhams. Despite these challenges, bank lending continued its upward trajectory, increasing by 3.6 percent, with forecasts suggesting acceleration to 5 percent over the next two years. This led “Commercial Research” to conclude that the Bank of Morocco has considerable room to continue its accommodative policy moving forward, with the possibility of reducing the interest rate to 2 percent by 2026.
