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Morocco's central bank cut its benchmark interest rate by 25 basis points to 2.75% on Tuesday, saying the decision was consistent with a drop in inflation.
Inflation is expected to fall to 1.5% this year, from 6.1% in 2023 due to lower food prices and easing external pressures, the bank said in a statement after its quarterly board meeting.
It said inflation would tick up to 2.5% as Morocco began a gradual cut of cooking gas subsidies.
A drop in farming output would lower economic growth to 2.8% this year, from 3.4% last year, the bank said, adding that growth is forecast to improve to 4.5% in 2025, assuming an average cereals harvest.
Morocco's current account deficit is expected to widen to 1.7% of GDP this year, up from 0.6% last year, it said, citing an increase in energy imports.
The North African country's foreign exchange reserves would stand at 382 billion dirhams ($38.4 bln) by the end of this year, enough to cover 5.5 months of import needs, it said.
The fiscal deficit would remain at 4.4% of GDP this year as higher tax revenue offset additional spending on safety nets and salary hikes, the bank said, forecasting a narrowing fiscal deficit to 4.1% of GDP next year.
(Reporting by Ahmed Eljechtimi; Editing by Alison Williams and Alexander Smith)