TEHRAN, Iran — Central banks play a key role in maintaining sustainable growth in equity markets through monetary policies. To this end, crucial strategies include adjusting the interbank interest rate in the context of a close watch on overall inflation trends.
In Iran, the inflation trend is definitively downward, with the rate evidently approaching the administration of President Hassan Rouhani’s single-digit target. This is indicated by recent Central Bank of Iran (CBI) figures that reveal that growth in the general level of prices for goods and services has dropped from 15.6% in the Iranian calendar year 1393 (March 21, 2014 - March 20, 2015) to just below 12% in 1394 (March 21, 2015 - March 19, 2016). As such, observers anticipate that the CBI will have no option but to compel banks to move to further cut interest rates. Indeed, only last month, banks were ordered to effectively slash deposit and business loan rates from 20% to 18% and 21% to 20%, respectively.