(Bloomberg) -- Morocco left interest rates unchanged as it monitors what impact a surprise cut in June is having on inflation that’s still running above the central bank target.
Bank al-Maghrib held the key rate at 2.75%, it said Tuesday in a statement following its quarterly policy meeting.
The regulator embarked on its first monetary easing since 2020 this summer. Most economists expect another reduction soon as the North African kingdom rolls out ambitious spending plans to rebuild areas damaged by an earthquake last year and prepare to co-host the 2030 football World Cup.
The central bank cited a “high degree of uncertainty” in outlook, including concern over higher global energy prices and the potential impact of domestic wage hikes on demand and costs.
Non-agricultural activities continue to recover and may “be supported in the medium term by the expected momentum of public and private investment,” it added.
Annual inflation slowed to 1.7% in August, remaining higher than the regulator’s 1.3% target for 2024. Authorities are phasing out a subsidy for butane-gas canisters used by millions in the country, although they’ve said the inflationary impact will be limited.
June’s reduction marked a “strategic” shift to support economic growth, according to Attijari Global Research, a unit of Morocco’s largest lender.
The country is entering “a new investment era,” Attijari’s researchers said in emailed comments to Bloomberg before Tuesday’s decision, predicting at least one more rate cut by year-end.
--With assistance from Tarek El-Tablawy.
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