Theoretical analysis of the evolution of monetary policy strategies adopted by Bank Al-Maghrib

Abstract

The choice of a monetary policy strategy differs from one country to another depending on the objectives of the central bank and the exchange rate regime adopted by that country.

The Majority of Central Banks are abandoning intermediate target strategies in favor of final (s) target (s) strategies. Since they set price stability as its priority objective. Inspired by this context, the Moroccan monetary authorities seek through reforms to put in place prerequisites for adopting a monetary policy strategy allowing it to achieve the objective of price stability, considered as the main objective of Bank Al-Maghrib in its last two statuses.

The objective of this article, on the one hand is to deal with the theories relating to monetary policy strategies and on the other hand, to analyze the monetary policy strategies adopted by the Central Bank of Morocco.

By adopting a review of narrative literature, the results showed that before 2006 Morocco had adopted a strategy of monetary anchoring through control of a monetary aggregate whether in the strict sense or in the broad sense (M1 or M3) . However, from 2006 and following the failure of the monetary anchoring strategy, Bank Al-Maghrib adopted another so-called multi-criteria strategy, which coexists with the exchange rate anchoring strategy. Thus, this work also explains that the reform of the exchange rate regime initiated by the Moroccan monetary authorities in 2018 through the gradual switch to a flexible exchange rate regime would aim to switch to an inflation targeting strategy when the flexibility of the exchange rate regime would reach an advanced level.

Keywords : Monetary policy, Central bank, Exchange rate regimes

JEL Classification :  E52, E58, E42.

Paper type : Theoretical article.