Rabat, June 18 (Reuters) - Morocco's central bank kept its key interest rate unchanged at 3.0 percent on Tuesday, forecasting inflation would stay in line with its price stability objective and as the government maintains the current subsidy system.
The central bank estimates that inflation in the next six quarters should remain broadly in line with the price stability objective in the medium term.
"Inflation would hover around 2.1 percent in 2013 and 1.6 percent in the third quarter of 2014, averaging 2 percent over the forecast horizon," the bank said in a statement.
Its forecast assumed that the government would maintain its current system of food and fuel subsidies. The government, however, has said it would reduce the subsidies by 20 percent if commodity prices allow, according to its 2013 budget.
The central bank projects GDP growth at between 4.5 and 5.5 percent this year, with less rapid growth in non-agricultural GDP of between 2.5 percent and 3.5 percent.
"Under these conditions, the non-agricultural output gap would remain below zero in the short run, indicating the absence of inflationary pressures from domestic demand," it said.
The statement was posted on the central bank's website after a quarterly meeting of its policy-making board.
(Reporting By Aziz El Yaakoubi; Editing by Susan Fenton)
((Aziz.ElYaakoubi@thomsonreuters.com))
Keywords: MOROCCO INTEREST/RATE
