Monday, September 22, 2008

Governor of Central Bank of Iran Left the Building

When was asked to resign a few months ago Mr. Mazaheri told the reporters: "I have told the President he has to fire me, I will not resign." The governor of Central Bank of Iran may be the last member of cabinet who spoke out against President Ahmadinejad's economic policies, advocated by Mr. Jahromi the minister of labor.
The rift between two reached a new height when Mr. Jahromi wrote a letter to the President asking him to fire both of them. It seems the President prefers to let Mr. Mazaheri go. Mr. Mazaheri is the 12th member of administration who is being replaced. Like Mr. Danesh-Jafari the former minister of economic affairs, it seems he too failed to persuade the other members of administration that injecting cash into economy causes inflation.
Mr. Mazaheri has served in several cabinets in the past; however his term as the governor of Central Bank is the most remarkable one. While many of his colleagues advocated lowering the interest rate and some even thought of dismantling the banking system he became the voice of reason. He argued that lowering interest rate amidst rising inflation is not a wise move. He also argues that financing short term return projects is not advisable.
His refusal to lower the interest rate might as well save the economy. His refusal to open the banks’ coffers to finance Mr. Jahromi’s short term investment programs might prevent the stagflation. His departure was unexpected, but it also signals that the President once again sided with his minister of labor. It seems now the President has the key to the coffers of Central Bank.

No comments: