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Iran slashes interest rates to boost economy

The Iranian leadership will need to make significant political and economic reforms, some of them counterintuitive, to complement interest rate cuts and generate economic momentum.
EDITORS' NOTE: Reuters and other foreign media are subject to Iranian restrictions on leaving the office to report, film or take pictures in Tehran.

A money changer holds Iranian rial banknotes as he waits for customers in Tehran's business district January 7, 2012. REUTERS/Raheb Homavandi  (IRAN - Tags: BUSINESS) - RTR2VZCL

After months of deliberations, the Iranian Money and Credit Council lowered bank interest rates in early May.

According to the Central Bank of Iran (CBI), the maximum interest rate that banks can offer on one-year savings will be 20% as opposed to the previous 22%. CBI Gov. Valiollah Seif said the council aimed to create a scenario in which interest on savings would be higher than inflation, while loans would be less expensive for industry. In other words, there is a desire to make loans extended by banks and financial institutions more affordable, thereby helping the country’s industrial sector create more jobs and generate economic momentum.

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