Morocco's central bank left its key monetary policy rate at 2.25 percent as inflation and the medium-term outlook is consistent with the bank's objective.
The Bank of Morocco, which cut its rate by 25 basis points in March on a lower inflation forecast, took note of the continued deceleration of inflation due to lower food prices and estimated it would drop to 1.6 percent by the end of this year and remain "subdued" in the medium term.
For 2017 the central bank forecast 1.0 percent inflation - the same as forecast in June - before rising to 1.5 percent in 2018.
Core inflation is seen trending higher, from 0.8 percent this year to 1.5 percent next year and 1.7 percent in 2018, mainly due to an expected improvement in domestic demand.
Morocco's inflation rate eased to 1.6 percent in October from 2.3 percent in September and an average of 1.9 percent in the third quarter.
Morocco's economy grew by annual growth of 1.0 percent in the third quarter, up from 0.5 percent in the second quarter but down from 4,.8 percent in the same 2015 quarter as the agriculture sector shrank by 11 percent, hit by the worst drought in decades.
The central bank said it had revised downward its 2016 growth forecast to 1.2 percent, with value added from the agriculture sector down by 9.6 percent and non-agriculture down by 2.6 percent. In addition, exports have also been negative and private consumption has slowed.
But assuming an average crop in the next two years, the central bank forecast growth of 4.2 percent in 2017 and 3.7 percent in 2018, with non-agriculture accelerating to 3.4 percent and 3.7 percent in the same two years.
Morocco's dirham fell sharply following the election of Donald Trump to U.S. President and has continued to decline though it rose in response to the central bank's decision. Today the dirham was trading at 10.17 to the U.S. dollar, up from 10.22 yesterday, down 2.5 percent this year.
On Dec. 1 the International Monetary Fund (IMF) said it expected Morocco's economy to slow to between 1.5 and 2.0 percent this year due to the bad cereal harvest but then accelerate to about 4.4 percent next year as agriculture recovers and the non-agriculture sector strengthens.
In the medium term, the IMF expects Morocco's growth to stabilize around 4.5 percent due to ongoing structural reforms to increase productivity and growth potential.
