RABAT: Morocco's central bank left its benchmark interest rate unchanged at 2.25 percent on Tuesday, six months after adopting a more flexible exchange-rate system for the Moroccan dirham.
Inflation, driven mainly by food prices, is expected to reach 2.4 percent in 2018 before easing to 1.4 percent in 2019, the bank, known as Bank Al-Maghrib, said in a statement.
Economic growth was forecast at 3.6 percent in 2018, based on expectations of a cereals harvest of 9.82 million tonnes this year. Gross domestic product growth is expected to slow to 3.1 percent in 2019.
"Based on these assessments, particularly those of medium-term inflation and growth prospects, the Board considered that the current level of the key rate at 2.25 percent remains appropriate and decided to keep it unchanged," the bank said in a statement.
The current account deficit would hover around 4.1 percent of GDP at the end of the year and 3.6 percent in 2019.
Foreign exchange reserves were projected at 255.4 billion dirhams ($26.72 billion) by the end of 2018, enough to cover almost six months of import needs.
The budget deficit is expected at about 3.4 percent of GDP in 2018 and 3.3 percent in 2019.
Last January, Morocco instituted a flexible exchange-rate system that sets a band where the dirham is traded against hard currencies at 2.5 percent either side, for a 5 percent range. It had traded 0.3 percent either side.
The central bank and the International Monetary Fund say the country's foreign reserves allow for a smoother transition to a more flexible exchange system.
The dirham is traded in a currency basket in which the euro has a weight of 60 percent and the dollar 40 percent.
The Bank al-Maghrib did not address in its statement the impact of a consumer boycott call against three of the country's top brands.
The campaign, begun on April 20, has forced Centrale-Danone , part of France's Danone, to cut production and lay off workers.
It has also targeted Afriquia fuel stations owned by billionaire minister Aziz Akhanouch and Sidi Ali mineral water brand.
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