Status quo, the most likely scenario

In a context of water stress weighing on the prospects for economic growth, an expansionary monetary policy favoring optimal financing conditions is always favored to support the recovery of the national economy.

Indeed, the forecasts of fine market connoisseurs point to a maintenance of the key rate at its current level, i.e. 1.5%, taking into account the evolution of inflation, the prospects for the agricultural campaign and the conditions of the banking sector liquidity.

An international inflationary surge

Despite inflationary pressures at the global level which are pushing towards a tightening of the monetary policies of the main central banks, market observers believe that inflation remains generally under control in Morocco, which rules out the scenario of a possible increase in the key rate.

“The inflationary environment remains, as of today, globally under control”, through a level of consumer prices in Morocco evolving around 2% in 2022 against 1.4% in 2021 (BAM estimates)”, underlines Attijari Global Research (AGR), in a recent report.

After a stable inflationary context in 2021, the major central banks are grappling with a lasting acceleration in inflation under the effect of unprecedented stimulus plans and the soaring prices of raw materials, in the wake of the Russian-Russian conflict. Ukrainian.

In the United States, the Federal Reserve (Fed) last Wednesday raised its key rates by a quarter of a percentage point for the first time since December 2018, in an attempt to curb rapid inflation. Six other similar increases are expected during this year.

The same shift in monetary policy was made by the Bank of England (BoE), which has just increased its interest rate by 0.25 percentage points to 0.75%, i.e. its pre-pandemic level, to counter inflation, which could reach, according to the institution, 8% in the second quarter of 2022, and perhaps even higher later in the year.

At the national level, AGR estimates that the evolution of inflation in Morocco should remain lower compared to the levels observed internationally, adding that “the prospects for the direction of inflation and the significant risks surrounding the growth of the GDP in 2022 would not justify at this stage, in our opinion, a monetary tightening of BAM in 2022″.

Reiterating the same observation, CDG capital Insight explains in a pre-advisory flash that “an increase in the key rate could amplify the expected slowdown in national growth in 2022 through a tightening of financing conditions, without however controlling the slippage. rising inflation”.

Bank liquidity: full board for BAM With a comfortable level of official reserve assets (AOR) which reached a new historic high of 337.3 billion dirhams (MMDH) at the beginning of March 2022, the Central Bank fully fulfills its function as regulator the liquidity of the banking system.

“Under these conditions, interbank rates remain in line with the key rate and MONIA rates are moving around their annual average, i.e. 1.42%”, specifies AGR in a note covering the period from March 11 to 17.

For its part, CDG Capital Insight attributes the alleviation of the banking sector’s liquidity deficit to an improvement in official reserve assets and a decline in the rate of growth of fiduciary money.

An “incomplete” transmission of the reduction in the key rate?

Access to financing at an advantageous cost remains a sine qua non condition for a sustainable recovery of the productive sectors. The key rate is the key instrument for influencing the cost of financing, hence its importance for economic operators and investment dynamics.

“The lending rates through which the private sector is financed fell by 16 basis points, from 4.55% in 2020 to less than 4.40% in 2021”, specifies AGR, adding that the primary bond rates have experienced a downward trend in investor compensation requirements.

On the other hand, CDG Capital insight reports a still incomplete transmission of the two reductions in the key rate recorded in 2020 to lending rates, with a weak recovery in loans to non-financial companies, particularly those intended for equipment.

The continuation of an accommodating monetary policy remains a real boon for economic operators who are evolving in a context that is still volatile and marked by uncertainty, which implies the maintenance of various support measures, both monetary and budgetary.

MAP / Youness Akrim

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