Economy, Business And Markets

SEO Questions Gov’t Focus on Inflation

SEO Questions Gov’t Focus on Inflation
SEO Questions Gov’t Focus on Inflation

An official in the Securities and Exchange Organization has rebuked the government for pushing hard only to curb the inflation rate, according to Akhbarbank news website.

“Disregarding the current recession and getting preoccupied with cutting the nominal inflation rate and basking in the glory will not help the economy, rather it will dampen the investment mood.”, said Keyvan Sheikhi, head of SEO’s information and statistics department.

He bemoaned the fact that the ultimate maximum return in the manufacturing sector is  16-17% of the sales revenues while it takes almost two years for any investment in manufacturing to start making a profit.

“Under the circumstances, focusing simply on inflation does not help the business environment but worsens the recession,” the official said, echoing the views of many observers and experts who recently have taken the government to task for allegedly getting confused with its list of macroeconomic priorities.

He criticized the “irrationally high” bank deposit rates that have enticed people to move their money into banks to make what he claimed was easy money. “As a large portion of the liquidity is held by banks, the administration fears they might land up insolvent if interest rates are cut further.”

Elaborating further, he said, “It seems the government is biding time until the recent nuclear accord between Iran and the six world powers comes into effect,” warning that there is no guarantee that the much talked foreign investment will flow into the manufacturing sector after the international sanctions are lifted.

The SEO official was referring to the July nuclear accord signed in Vienna that is expected to put an end to most international sanctions against Iran in return for concessions in its disputed nuclear program.

Sheikhi proposed that liquidity should be directed into capital markets arguing that “fluctuations in share prices has no impact on inflation or overall prices and poses no risk to the value of the national currency.”