Morocco's central bank maintained its key policy rate at 2.25 percent, saying inflation is forecast to remain in line with its objective and average 1.6 percent this year and 1.2 percent in 2017 due to "the dissipation of temporary shocks on volatile food prices which would more than offset the expected increase in core inflation."
The Bank of Morocco, which cut its rate by 25 basis points in March due to a downward revision in inflation forecasts, added that foreign exchange reserves are expected to continue to increase - though at a slower rate than expected in June due to an expected decline in foreign investment - to equal imports of around 7 months and 6 days by the end of this year and 7 months and 20 days by the end of 2017.
Morocco's inflation rate was steady at 1.6 percent in August and July.
In June the central bank forecast headline inflation in 2017 of 1.0 percent.
The exchange rate of Morocco's dirham depreciated by 0.61 percent in the second quarter, mainly due to a decline in the exchange rate against the euro, the bank said, adding that the real exchange rate fell by 0.78 percent as inflation in Morocco was lower than in partner countries.
"For the full year 2016, it is expected to rise by 1.4 percent and to decline by 0.4 percent in 2017," the central bank added.
The dirham was trading at 9.72 to the U.S. dollar today, up 2.06 percent this year.
