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Morocco’s central bank will begin implementing inflation targeting in January 2027, marking a major shift in its monetary policy framework, while maintaining its current exchange rate regime for the time being, Bank Al-Maghrib Governor Abdellatif Jouahri said.
Speaking after the bank’s quarterly board meeting in Rabat Monday, Jouahri said the Moroccan economy is not yet ready to move to a fully flexible exchange rate system.
“The economic fabric is not sufficiently prepared,” he noted, adding that the interbank foreign exchange market is now operating without central bank intervention, a step he described as encouraging.
The first phase of Morocco’s exchange rate reform was completed successfully, but the second phase- abandoning the dirham’s peg to a currency basket- will be put off. Instead, the central bank will focus on inflation targeting, with technical support from the International Monetary Fund (IMF).
The IMF, which had previously urged Morocco to accelerate its transition to a flexible exchange rate, has revised its stance. “We have reached common ground,” Jouahri said, confirming that both parties agreed to prioritize inflation targeting while maintaining the current peg.
Inflation targeting involves setting a specific inflation rate as the central bank’s primary objective. Bank Al-Maghrib will use tools such as its benchmark interest rate to influence demand and stabilize prices.
Preparations for the new framework began in July, including the development of methodologies, tools, and human resources. A trial period will be conducted throughout 2026, during which the bank will apply both the current regime and the inflation targeting model in parallel to assess their compatibility.
“This dry run will allow us to ensure we’re ready to launch the reform properly,” Jouahri said.
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