I am not so sure if increasing interest rate will affect M1 in Iran. Still it seems it has been done to encourage people to keep their deposits in the banks. That is being said, I wonder if this means banks are going to charge a higher APR as lenders. One has to wait and to see. All in all currency market seems a bit calmer. Although I do not know if this is due to the government's edicts or its new policy regarding interest rate.
There is one silver line though; Iranian public and media have been talking about economics so much that I think they are going through a crash course on Econ101. I hope this increases the public awareness of market dynamism and shifts in the economy.
Showing posts with label Central Bank. Show all posts
Showing posts with label Central Bank. Show all posts
Friday, January 27, 2012
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.
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.
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