Morocco Central Bank Keeps Key Interest Rate Unchanged at 3%

Morocco’s central bank left its benchmark interest rate unchanged, saying economic growth is slowing amid the debt crisis in Europe.

The Rabat-based bank, which meets every three months to review monetary policy, said it held the key rate at 3 percent, after cutting it in March from 3.25 percent in a bid to help an economy squeezed by slumping agricultural output and the euro-area crisis.

Gross domestic product will probably grow less than 3 percent, the bank said on its website today, citing “risks from economic slowdown in the main partner countries and lower cereal production,” and slowdowns in foreign direct investment and remittances from abroad.

Finance Minister Nizar Baraka, in an interview on June 6, predicted that growth may slow to 3.4 percent this year from 5 percent. He said inflation probably won’t exceed 2 percent, even after an increase in the price of subsidized fuel aimed at narrowing the budget deficit.

“The latest increase in fuel prices should be of contained impact and therefore not require a move from the central bank, at least at this stage,” Mohamed Abu Basha, a Cairo-based economist at investment bank EFG-Hermes Holding SAE, said in response to e-mailed questions. At the same time, “cutting again won’t necessarily support growth given that the weaker growth is mainly the result of lower agricultural production and a weak Europe.”

The country’s foreign exchange reserves are equivalent to more than four months of imports, after declining almost 15.5 percent since May 2011, the central bank said today.

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