The rate stays, the forecast rises
Bank Al-Maghrib held its key policy rate at 2.25% at its March 2026 board meeting, the second consecutive hold after cutting from 2.75% in two steps during 2024 and early 2025.
The central bank's growth forecast is what matters more. BAM now projects GDP expansion of 5.6% in 2026, up from 4.8% in 2025. That would be Morocco's strongest growth year since the post-COVID rebound in 2021.
Agriculture is doing the heavy lifting
The upgraded forecast rests heavily on a single factor: rain. BAM expects cereal harvests to reach 82 million quintals in 2026, a sharp recovery from drought-hit years. The agricultural sector's turnaround accounts for much of the gap between 2025 and 2026 projections.
Non-agricultural sectors continue to grow, but at a steadier pace. The industrial expansion driven by automotive, aerospace, and phosphates remains on track, though it was already priced into earlier forecasts.
Inflation is a non-issue, for now
BAM projects inflation at just 0.8% in 2026, rising slightly to 1.4% in 2027. By regional standards, this is remarkably contained. Turkey, Egypt, and Nigeria all face double-digit inflation. Morocco's price stability gives BAM room to keep rates low without risking overheating.
The subdued inflation also reflects weak domestic demand in some segments. Consumer spending has been cautious since the 2022-2023 inflation spike, and household confidence has not fully recovered.
The external risk BAM flagged but did not act on
The board acknowledged "increasing global uncertainty" from geopolitical tensions and commodity market volatility. The Middle East conflict has already pushed fuel prices higher in Morocco, with diesel up MAD 2 per liter this month.
But BAM chose stability over preemption. Holding rates signals the central bank believes Morocco's domestic fundamentals are strong enough to absorb external shocks, at least for now. The 2027 growth forecast drops to 3.5%, suggesting BAM itself expects the agricultural boost to fade.
What this means
For investors: a 2.25% policy rate with 0.8% inflation means real rates are firmly positive. Morocco offers yield in a region where many central banks are still chasing inflation. The growth upgrade to 5.6% strengthens the case for Moroccan fixed income and equity exposure.
For the broader economy: the rate hold keeps borrowing costs stable for businesses and mortgage holders. Combined with the Moody's outlook upgrade to positive, Morocco's monetary and credit story is aligned.
The risk is overreliance on agriculture. Strip out the cereal harvest, and the 2026 growth story looks closer to 3.5% than 5.6%.
Sources: Bank Al-Maghrib Q1 2026 Board Meeting communique, reported by APA News and Morocco World News, March 18, 2026.
