Baku, Azerbaijan, Apr. 19
By Umid Niayesh - Trend:
Iranian banks have agreed to set the annual interest rate for bank deposits at 20 percent, Abdolnaser Hemmati, chairman of the coordination council of Iranian state-run banks, said.
The decision was made after a meeting of Iranian state-run and private banks' directors on April 18, Hemmati added.
Iranian banks also agreed to decrease the interest rate for credits by 2-3 percent, he noted.
He further said that the decision will come to force on May 5, after approval of the Central bank and the Money and Credit Council, Iran's Fars news agency reported.
Last year, Iranian administration set the annual interest rate for bank deposits at 22 percent.
As of 2010, the interest rate between banks is set by the government of Iran.
Earlier, Iranian media outlets reported that five state-run and private banks have increased interest rates to 26 percent, while the Central Bank has not issued any order for increasing the interest rates since February 2012.
The negative real bank interest rates following to a rise in the inflation rate led to a fiscal crush in the country's fiscal system, the Central Bank of Iran said last December.
The real interest rate is the lending interest rate adjusted for inflation as measured by the GDP deflator.
In August 2013, the Central Bank Governor Valiollah Seif said that the bank's interest rate should be set proportional to the inflation rate.
Seif added that interest rates should be revised, so that it would be less than the inflation rate.
The inflation rate in Iran in 2005 was about 10.4 percent, but in mid-2013, when Rouhani came to power, the inflation rate and point-to-point inflation rate were 37.5 percent and 44 percent, respectively.
The International Monetary Fund (IMF) put the country's inflation rate at 15.5 percent in 2015, the lowest rate since 2007.
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