Iran considering increase in interest rates

The Iranian administration is considering an increase in interest rates, the country's Money and Credit Council member Mohammad Nahavandian has said. "Currently, the country is grappling with inflationary recession, so that it is not possible to change the rates swiftly," he was quoted as saying by the Mehr News Agency.

The Money and Credit Council is the highest banking policy-making body of the Central Bank of Iran. Its permanent members include the CBI governor, the finance and economy minister, two ministers chosen by the cabinet, the head of the chamber of commerce, the general prosecutor, and two lawmakers (MPs).

In August, Central Bank of Iran Governor Valiollah Seif said that interest rates should be set proportional to the inflation rate.

He added that interest rates should be revised, so that it should be less than the inflation rate. He further said that the free market exchange rate of 32,000 rials for U.S. dollar is not abnormal.

Foreign currency exchange rates should be adjusted each year based on the inflation rate, he said.

The Central Bank of Iran will focus on controlling liquidity and bringing down inflation as President Hassan Rouhani has agreed to separate monetary and fiscal policies, giving the central bank more independence, Seif further said.

He said President Hassan Rouhani inherited an economy in recession as international sanctions against the country weakened its currency and accelerated inflation to about 40 percent in September.

Source: Tehran Times