Tehran, Iran, April 15
Trend:
A senior economist believes that changing policies in lowering the bank interest rate or increasing the monetary base has the same inflationary impact on the country's economy.
The Governor of the Central Bank of Iran has announced that in the current situation, the increase in bank interest rate does not have any efficiency other than leading to an increase in production costs.
"In the past years, the CBI policy envisaged lowering the interest rate, which negatively affected the banks,” an economics professor at the University of Tehran Kazem Doosthosseini told Trend.
To solve the credit shortage of banks due to decreasing interest rate, CBI began to allocate credit line and grants which caused an increase in monetary base, he explained.
“The Central Bank, like in the past few years, seeks to increase the volume of liquidity and printing of money,” the expert added.
He said that changing the policy of lowering the interest rate or increasing the monetary base has the same inflationary impact on the country's economy.
“At the beginning of the Rouhani's first presidential term, liquidity was $114 billion, while it has already reached $405 billion,” he said. “The main reason for this increase in liquidity is the increase in the monetary base.”