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Morocco's central bank cuts benchmark interest rate to 2.5 pct

Reuters , Tuesday 16 Dec 2014

Morocco's central bank cut its benchmark interest rate on Tuesday to 2.5 percent from 2.75 percent, the second rate cut in three months as it seeks to support economic growth while expecting inflation to remain low.

"Considering core inflation forecast ... and the continuing improvement in foreign exchange reserves, and in order to support economic recovery, the (bank's) board decided to lower again the key rate by 25 basis points to 2.5 percent," it said in a statement.

At its last board meeting, in September, the bank cut the rate to 2.75 percent from 3 percent.

The central bank forecasts gross domestic product to grow 4.4 percent next year, up from 2.5 percent in 2014, thanks to good rainfall which will boost agricultural output.

It said inflation would remain "relatively low, with balanced risks," forecasting it at 0.4 percent for the whole year 2014, rising to 1.2 percent in 2015.

Morocco subsidises food products and cooking gas, but has ended subsidies for other energy products including gasoline and fuel.

The central bank said it expects the current account deficit to reach 6 percent in 2014, decreasing to 5 percent in 2015 mainly because of the fall in global oil prices.

It also confirmed government expectations to reduce the budget deficit to 4.9 percent of GDP in 2014, and 4.3 percent in 2015.

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