Monetary Policy: Bank Al-Maghrib Keeps Its Key Rate Unchanged at 2.25%

During this session, the bank analyzed the evolution of both the national and international economic situation, as well as the medium-term macroeconomic projections of Bank Al-Maghrib. On the international front, the Council reviewed recent developments in U.S. trade policy, which included the conclusion of several bilateral agreements. However, these agreements have not significantly alleviated existing uncertainties. These uncertainties continue to weigh on global economic prospects, which are expected to slow down, albeit at a slower pace than anticipated in June. In this context, supported by a decline in energy prices, inflation is expected to continue its deceleration, with varying dynamics from one economy to another. Domestically, the latest national accounts data for the first quarter of 2025 indicate a continuation of the favorable economic activity observed in 2024, particularly with notable improvements in non-agricultural sectors. This positive trend is expected to consolidate in the medium term due to numerous large-scale projects that have been launched and scheduled. This has been reflected in the labor market, with a strong rebound in job creation starting from the third quarter of 2024. However, recent data for the second quarter of 2025 reveal a significant weakening in job creation, particularly in the services sector. Regarding inflation, it continues to evolve at moderate levels, with an average rate of 1.1% over the first eight months of 2025. According to Bank Al-Maghrib's projections, inflation is expected to be around 1% this year, remaining nearly stable compared to 2024, before accelerating to 1.9% in 2026. The underlying component of inflation is projected to decrease from 2.2% in 2024 to 1.1% in 2025, before rising to 2% in 2026. Meanwhile, inflation expectations remain well anchored, with financial sector experts forecasting average rates of 2.1% over an eight-quarter horizon and 2.2% over a twelve-quarter horizon by the third quarter of 2025. In terms of the transmission of previous Council decisions, the decline in lending rates for the non-financial sector continues. The cumulative decrease since the start of monetary easing in June 2024 reached 59 basis points by the second quarter of 2025, compared to 75 basis points for the key rate. Overall, the Council considers that uncertainties regarding economic prospects remain high. Externally, in addition to developments in U.S. trade policy, these uncertainties stem from ongoing geopolitical tensions and conflicts in the Middle East and Ukraine, along with their implications. Internally, they are particularly linked to water stress and climatic conditions expected during the upcoming agricultural campaign, as well as data from the 2026-2028 Triennial Budget Programming. Given all these factors, the Council has decided to keep the key rate unchanged at 2.25%, while continuing to strengthen measures aimed at easing financing conditions for businesses, especially small and medium-sized enterprises (SMEs). The Council will closely monitor the evolving situation and base its decisions on the most up-to-date data during each meeting.