AGR maintains its scenario of stability of the key rate in the second half of the year

The key rate of Bank Al-Maghrib (BAM) would remain stable at 1.5% during the second half of this year, predicts Attijari Global Research (AGR). “Taking into account the liquidity conditions of the money market, the evolution of the refinancing costs of the economy as well as the outlook for short-term bank loans (CT), we maintain our scenario of stability of the key rate at 1.5% during the second half of 2021 “, indicates AGR in its half-year report on the interest rate market. This indicator is in close connection with the evolution of short maturities of the yield curve, notes the same source, adding that “the fundamental factors which justify this scenario still seem to us to be topical”, reports the MAP. “As a reminder, our rate stability scenario is based on an inflationary environment that is globally manageable. It is true that the consumer price index accelerated during H1-2021, in line with the global trend. For example, inflation in the United States should fall from 1.8% in 2020 to 2.3% in 2021E. In the euro zone, the price index would stand at 1.2% for the whole of year 2021E, against 0.3% in 2019. Nevertheless, we are confident that inflation will be controlled in Morocco below 2% during the period 2021E-2022E. Such a scenario would rule out any risk of monetary tightening of BAM to CT, “say analysts at AGR. They thus note four observations concerning inflation. The first indicates that the large central banks, like the American Federal Reserve (FED) and the European Central Bank (ECB), agree on the temporary nature of recent inflationary pressures. Indeed, these would not present a real source of concern in the eyes of these institutions. Under these conditions, the main international central banks suggest the maintenance of their accommodative monetary policies in 2021E. The second observation is based on the fact that according to BAM, inflation would settle around 1.0% in 2021E against 0.7% in 2020. This would evolve to 1.4% from 2022E. Originally, the rise in the prices of raw materials, in this case those of petroleum and crude oils. Regarding the third observation, AGR analysts stress that controlling the prices of the food component, under the effect of an exceptional agricultural season combined with a recovery without much pressure from domestic demand, would make it possible to contain the price index in Morocco at moderate levels. As for the 4th observation, analysts rule out the scenario of a sharp deterioration in the health situation in H2-2021. “After having surpassed the peak of contamination in August 2021 and taking into account the pace of the vaccination campaign in Morocco, we remain confident about a gradual return to normal in the various sectors of activity affected by this health crisis” .