This Council, continues the same source, intervenes in a very difficult national and international context, marked, among other things, by the outbreak of inflation, the expected sharp slowdown in economic growth in 2022 and the Russian-Ukrainian crisis.
Like several central banks at the international level, the monetary policy decisions of Bank Al-Maghrib are indeed faced with the dilemma of reviving economic growth post-Covid 19 crisis in a hyper inflationary context, requiring a return to restrictive monetary policies.
CDG Capital Insight notes, in this regard, that in the context of the report on the New Development Model, the Special Commission has retained as the main recommendation to improve the conduct of monetary policy in Morocco: “a conduct of monetary policy that reconciles in a more balanced manner between growth and inflation targets within the framework of a dual mandate”.
In this context, the investment bank wishes to recall that since the outbreak of the Covid-19 crisis in 2020, the Central Bank has adopted a series of expansionary measures in order to cushion the impact of the health crisis on the economy. national level and facilitate access to financing. For example, it lowered the key rate by 25 bps in March 2020 and by 50 bps in June 2020.
CDG Capital Insight also points out that the next BAM Board meeting will take place in a context where the liquidity deficit of the banking system, after an attenuation recorded in Q4-2021 and January 2022, has resumed its rise, from February 2022, to drop to -74.8 billion dirhams as a weekly average in April 2022 against -66.7 billion dirhams and -64.2 billion dirhams recorded respectively in the two previous months.
This increase is explained by a combined deterioration of the two main independent factors of bank liquidity. First, a decline in official reserve assets, which fell to 329.2 billion DH at the end of April 2022 against 332.7 billion DH and 335.7 billion DH recorded respectively in March and February 2022, thus partially reflecting , the sharp widening of the trade deficit following a surge in imports, particularly in values.
Then, a significant increase in currency in circulation at a rate of 9.4% year-on-year at the end of April 2022, mainly in connection with the significant drop in bank deposit rates.
Similarly, net claims on the State increased sharply during the first quarter of 2022 by +27.9 billion dirhams to 300.4 billion dirhams, before falling slightly by around 5 billion dirhams in the month of ‘april. This situation reflects the significant needs, on the one hand, of the Public Treasury given the almost total recourse to the internal market for its financing and, on the other, of Public Enterprises and Establishments in this post-Covid 19 recovery phase.
Under these conditions, BAM increased the outstanding balance of its interventions with banks, rising to an average of approximately 90.8 billion DH recorded in May 2022 against 85.4 billion DH and 78.7 billion DH recorded respectively the two previous months . The next BAM Board will also take place in a context where the year-on-year growth rate of bank loans to the private sector increased slightly in April 2022 by 4.6% against 3.8% and 4.4 % the previous two months and 3.4% a year earlier.
The increase in the rate of growth of credits is still fueled by accounts receivable and cash and housing loans against declines in those intended for equipment and real estate development, adds the same source.
Based on all of these developments, CDG Capital Insight believes that it is more likely that the Bank Al-Maghrib Board will keep the key rate unchanged at 1.5% during this next Board meeting, given (i) the origin of inflationary pressures, thus limiting the effect of restrictive monetary policy action on controlling inflation and (ii) the post-Covid-19 crisis recovery conditions, which remain fragile and surrounded by uncertainties.