RABAT - Morocco's central bank kept its benchmark interest rate steady at 3%, saying the borrowing rate was consistent with the inflation outlook as the country prepares to meet the costs of reconstruction after September's earthquake.

Inflation dropped from 10.1% in February to 5% in August, below the annual 6% average expected this year, the bank said in a statement following its quarterly meeting.

The bank said GDPO growth would improve from 2.9% this year to 3.2% next year, without taking into account the earthquake's impact.

(Reporting by Ahmed Eljechtimi; Editing by Andrew Heavens)