Casablanca – Morocco’s monetary policy is expected to remain broadly stable through 2026, with the country’s central bank, Bank Al-Maghrib, likely to keep its benchmark interest rate unchanged at 2.25%, according to multiple analyses by BMI–Fitch Solutions. This outlook reflects a balance between controlled inflation, moderate economic growth, and rising external uncertainties, particularly those linked to global energy markets and geopolitical tensions.

A baseline scenario of monetary stability

The expectation of a steady policy stance follows recent decisions by Bank Al-Maghrib to hold its key rate at 2.25%, after a 25-basis-point reduction in 2024. Analysts suggest that the central bank is now entering a phase of careful monitoring, where maintaining stability is preferred unless significant economic changes occur.

The benchmark rate remains the central bank’s primary tool for guiding monetary policy, directly influencing borrowing costs across the economy. By keeping it unchanged, policymakers aim to support economic activity while ensuring inflation remains within a manageable range.

BMI–Fitch Solutions indicates that inflation in Morocco is expected to average around 1.6% in 2026. Although slightly higher than earlier projections, this level remains relatively moderate and does not justify immediate monetary tightening.

Inflation dynamics and energy price pressures

Despite the overall stable outlook, inflationary pressures persist. Rising fuel prices—particularly diesel—are already affecting transportation costs and consumer prices. These effects are expected to become more visible during certain periods, especially in early 2026, following several months of declining prices.

Morocco’s liberalized energy pricing system means that global price movements are quickly transmitted to the domestic market. As a result, trends in international oil markets, including Brent crude oil, remain a key factor. Forecasts suggest a possible decline in oil prices later in the year, which could help partially offset inflationary pressures.

In addition, improved agricultural production is expected to play a stabilizing role, helping to ease overall price pressures and support food supply conditions.

Exchange rate developments and external balances

The Moroccan dirham has experienced some depreciation in recent months, largely due to the strength of the U.S. dollar. This trend increases the cost of imports, particularly energy and certain food products, which could add to inflation.

However, the dirham remains within its managed fluctuation band, supported by its peg to a basket composed of 60% euro and 40% dollar. This framework helps limit excessive volatility and provides the central bank with room to maintain its current policy stance.

Still, a prolonged depreciation could lead to higher imported inflation and may require policy adjustments if pressures intensify.

Growth outlook remains supportive but moderate

Morocco’s economic growth is expected to gradually recover over the coming period, supported by improved agricultural output and a rebound in external demand. Projections from institutions such as the International Monetary Fund and the World Bank point to growth between 3.2% and 3.5% in the near term.

While this represents a positive trend, it does not indicate excessive demand that would require higher interest rates. This reinforces the case for maintaining current monetary conditions.

At the same time, Bank Al-Maghrib is working on structural reforms to strengthen the financial system, including plans to develop a secondary market for non-performing loans. This initiative is expected to improve banks’ lending capacity and support investment.

Influence of global monetary policy

Morocco’s monetary policy is closely linked to global financial developments. In particular, the policy direction of the European Central Bank is an important factor, given Morocco’s strong economic ties with the eurozone.

Current expectations suggest that eurozone interest rates may remain relatively stable, which supports the case for maintaining Morocco’s current rate level. Bank Al-Maghrib generally aims to preserve a favorable interest rate differential with European markets to support exchange rate stability and capital flows.

Risks increasingly tilted toward tightening

Although the baseline scenario points to stability, risks are increasingly shifting toward the possibility of tighter monetary policy. The main concern is the geopolitical situation in the Middle East and its potential impact on global energy prices.

If energy prices remain high for an extended period, inflation in Morocco could exceed 2% in 2026. In such a case, the central bank may need to raise interest rates to prevent inflation expectations from rising further.

Additional risks include continued depreciation of the dirham, volatility in commodity markets, and changes in global monetary policy that could affect financial conditions.

Outlook and policy direction

Bank Al-Maghrib’s board, which meets regularly to assess economic conditions, will continue to monitor inflation, growth, and external developments closely. Upcoming meetings are expected to provide further clarity on the policy outlook.

For now, the central scenario remains one of stability, with the key interest rate likely to stay at 2.25% throughout 2026. However, this outlook depends on the evolution of external factors, particularly energy markets and geopolitical developments.

Morocco’s central bank appears committed to maintaining a balanced and flexible approach, supporting economic growth while remaining ready to act if inflationary risks intensify.