The evolution of the interest rate in Morocco from the COVID-19 crisis until 2024

Résumé

Morocco faced major financial and economic shocks due to the COVID-19, including a slowdown in growth, volatile inflation, and a decline in commodity prices, in addition to monetary tightening at the international level. Bank Al-Maghrib has enhanced its role by using the key rate as the principal monetary policy instrument.

The policy rate underwent three different phases between 2020 and 2024: monetary easing supporting the economy, tightening to control inflation, and loosening to support the economic recovery.

To analyze the impact of these decisions, it is necessary to use a conceptual model of monetary transmission such as VAR, and ARDL. This model suggests that short-term interest rates are first influenced by the key rate, which has an impact on the credit conditions offered by commercial banks. Economic growth is influenced by changes in consumption and investment behaviors caused by these conditions. Also, inflation expectations and price stability are influenced by monetary policy.

A few questions arise in this context:

• What actions has the Central Bank taken to reduce the consequences of economic shocks?
• What is the significance of the policy rate as a crucial tool for financing the actual economy?
• Is it feasible to maintain price stability in a climate with structural constraints with the recent decline in the policy rate in 2024-2025?

This study aims to assess the policy rate's ability to transmit its effects to the real economy and maintain prices in a Moroccan context characterized by significant economic turbulence.