The Central Bank of Iran has outlined priorities in the new fiscal year that started on March 21 including taming high inflation, boosting manufactures and stabilizing markets.
It said it is determined to continue using new monetary policy instruments and expand the scope of open market operations to harness inflation.
"The goal can be reached by revising economic policies related to the fiscal budget and monetary policies," the CBI said in a press release on its website.
Both money supply and monetary base experienced unprecedented growths last year with the CBI blaming flaws in government spending, the US sanctions and the coronavirus pandemic.
Data released by the CBI shows money supply reached 31,300.2 trillion ($125.2 billion) at the end of third quarter of the previous fiscal year on Dec. 20 -- up 38.4% year-on-year.
The monetary base jumped to 4,075.4 trillion rials ($16.3b) in the first nine months of the previous fiscal year up 29.7% annually.
Money supply growth combined with soaring forex rates were the main causes of consumer price inflation last year, foiling CBI’s efforts to realize its declared inflation target around 22% announced in May 2020.
Data released by the Statistical Center of Iran show the average goods and services Consumer Price Index in the 12-month period to Feb. 18 increased by 34.2% compared to the corresponding period last year.
The regulator pointed to efforts to boost the national currency by "controlling expectations" in financial markets and limiting the growth of money supply.
"That can be achieved by controlling growth of the monetary base and maintaining executive measures to correct banks’ balance sheets".
The regulator earlier announced plans to monitor balance sheets at regular three-month intervals. Investment in non-bank activities, increase in bank spending, expanding branches and buying fixed assets are among highly controversial activities of banks the CBI wants to end.
Mobilizing efforts to stabilize markets and managing volatility is another declared goal of the central bank in the new calendar year aimed at improving the "predictability of foreign exchange rates and other economic variables".
Countering money laundering and improving transparency of bank transactions are high on the CBI agenda by improving and expanding oversight of banks’ lending practices and fighting corruption in the banking system.
As for measures to boost production, the CBI underscored policies to "direct funding toward production" and "limit lenders' non-banking activities."
Taking into account "a combination of economic indicators" the CBI said the new fiscal year would "see economic stability”, albeit "if the economy is not afflicted with a new shock."
