Business And Markets

The Interest Rate Reality  

The Interest Rate Reality  
The Interest Rate Reality  

Interest rates are supposed to be useful financial instruments allowing governments to curb inflation, However, due to its misapplication over the years in Iran it has lost its efficacy as investors are averse to putting money in the stock market, companies face problems getting funds while the banking system is under pressure to keep interest rates between 21% and 22%, and economist said. 
“For years officials have reiterated that they will reduce lending rates to help business grow. But what has actually happened is that with lower rates a select few [vested interests] with special access to bank facilities have borrowed to invest in asset markets and in the process pocketed millions during high inflation,”  Peyman Mowlavi said.
“This is while the majority of the population, manufactures and stock companies have little if any access to loans with nominal interest rates. Despite the fact that interest rates are [and should be] effective in controlling inflation they are not used as expected in our country and lost their relevance,” Mowlavi was quoted by SENA news agency as saying.


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