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Morocco's central bank left its monetary policy rate at 2.25 percent, noting the downward trend in inflation had been reversed and inflation is expected to average 0.7 percent this year, down from 1.6 percent in 2016, but then rise in 2018 to average 1.5 percent and 1.6 percent in 2019.


The Bank of Morocco, or Bank Al-Maghrib (BAM), which has maintained its rate after cutting it by 25 basis points in March 2016, also forecast economic growth this year of 4.1 percent, down from June's forecast of 4.4 percent but up from 1.2 percent in 2016 when agricultural output shrank from drought.


Next year Morocco's economy is expected to slow to 3.0 percent growth before accelerating to 3.6 percent in 2019, BAM added.

In the second quarter of this year, Morocco's economy grew by 4.2 percent, BAM said, up from 3.8 percent in the first quarter.


Morocco's headline inflation rate rose to 0.6 percent in October for the third month in a row of a rise in consumer prices following a fall of 0.1 percent in July.


The exchange rate of Morocco's dirham has risen sharply this year as the country prepares to float it, a move that is also supported by the International Monetary Fund, which in November said a transition to a more flexible exchange rate would help the country absorb external shocks and raise its competitiveness.


"'With current conditions that continue to offer a window of opportunity to implement the transition in a gradual and orderly manner, starting the process as soon as possible would be appropriate," the IMF said on Nov. 7.


The government had planned to float the dirham last year but then postponed it to ensure that all parties were prepared for such a move following the sharp fall in Egypt's pound following its float.


The dirham was trading at 9.4 to the U.S. dollar today, up 7.6 percent this year.

 

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