Moroccan keeps key interest rate unchanged

Reuters, Wednesday 22 Dec 2010

Morocco's central bank held its benchmark interest rate at 3.25 percent on Tuesday, citing stability in prices and an absence of monetary pressures

Morocco's central bank held its benchmark interest rate at 3.25 percent on Tuesday.

"Under these circumstances where the central inflation forecast continues to be consistent with the price stability objective and the balance of risks is broadly neutral, the (policy-making) board decided to maintain the key rate at 3.25 percent," Bank al-Maghrib said in a statement.

"The uncertain international outlook is expected to impact domestic activity. Against this backdrop, overall GDP growth would be close to 4 percent in 2010," it said. The estimate is in line with government forecasts.

The statement was issued on the bank's website after a quarterly meeting of its policy-making board that examined economic, monetary and financial developments and inflation forecasts prepared by the bank up to the first quarter of 2012.

The next meeting of the bank's policy-making board will be held on March 29, 2011.

On Monday, Morocco's economic planning and statistics authority said higher food and education costs pushed year-on-year inflation to 2.6 percent in November, exceeding for the first time the government's 2010 inflation forecast.

However, the central bank said: "Inflation remained subdued, as demand pressure eased and inflation in the major partner countries continued to be low.

"Core inflation, which reflects the underlying trend of prices, continues to grow very moderately, at rates not higher than 1 percent since the second quarter of 2009," Bank al-Maghrib said.

It expects headline inflation to average about 1 percent in 2010 and "hover around 2.2 percent over the next six quarters".

Money supply M3 grew 5.7 percent in the 12 months to end-October, compared with an average of 6.7 percent in the first three quarters of 2010.

The central bank said this suggested "the absence of monetary pressure on prices. As in the first ten months of the year, credit in 2011 would grow at rates close to its long-term average," it said.

Industrial producer prices, driven mainly by changes in international commodity prices, rose 7.1 percent in October, compared with 4.9 percent in September and 5.7 percent in August, it added.

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