CBI Sees Liquidity Surge as Harmless
Economy, Business And Markets

CBI Sees Liquidity Surge as Harmless

As concerns over the pace of liquidity growth mounts, the Central Bank of Iran has responded by arguing that liquidity is merely a ‘nominal variable’ and such variables are always on the increase.

CBI deputy for economic affairs, Peyman Ghorbani says liquidity growth must be studied carefully, but in doing so other factors like rate of inflation, stability of foreign exchange rates, management of the liquidity growth itself and CBI’s overall financial statements, should also be considered, the Monetary and Banking Research Institute  reported on its website Saturday.

“Although some emphasize the importance of liquidity growth, personally, I do not agree with such an approach,” he said.

CBI data indicates that liquidity was in the range of 9.75 quadrillion rials ($321.9 billion) by February 19, marking a 28.7% surge at an annualized rate. It shows that the monetary base reached 1.23 quadrillion rials ($40.74 billion) by that date, up by 10.4% from a year earlier.

  Issues that Matter

Noting that lowering the inflation rate should be regarded as the ultimate goal, Ghorbani said “now that inflation has declined to 11%, achieving single-digit inflation seems pretty feasible in the coming months.”

“For monetary policymakers, liquidity growth is the instrument through which the ultimate goal, which is reducing the inflation rate, becomes feasible. Meanwhile, in the previous fiscal year (ended March 19) measures for boosting the economy were taken of which liquidity growth became an inevitable consequence,” he recalled.

However, this does not indicate that the CBI was inattentive to the liquidity surge; in fact, the CBI keeps a close watch on this issue, he said. ‘’The point is that liquidity growth worked as a stimulus for economic growth to ensure gradual decrease in the inflation rate and stability of the foreign exchange market.”

Giving an example of innocuous liquidity growth in the past, he said, “In July 2006 liquidity exceeded one quadrillion rials, but nothing devastating happened.”

Regarding the overall economic performance of the government, Ghorbani said generally speaking the targets for 2013-2014 have been achieved.

“The Rouhani government saw a 75% liquidity growth while it did well in curbing inflation and stabilizing the foreign exchange market.”


Short URL : http://goo.gl/0Wa4xG
  1. http://goo.gl/lrT8vZ
  • http://goo.gl/V7RpTE
  • http://goo.gl/1qRM9q
  • http://goo.gl/d5x6y7
  • http://goo.gl/DJOdmS

You can also read ...

Italian investment companies remain active in Iran, despite...
Iranian Insurance Firms' Premium Income Exceeds $1.2b in H1 (Mar-Sep 2018)
Iran insurance industry earned 183 trillion rials ($1.28...
Iran, India Leading Global Ammonia Capacity Growth
Iran and India will continue to lead the global ammonia market...
Iran Auto Industry Hither and Thither
Over the past few days, Iran’s beleaguered auto industry has...
Iran-Russia Non-Oil Trade Sees Over 80 Percent Hike (September 2018)
Iran traded 956,662 tons of non-oil commodities worth close to...
US Sanctions Against Iran Ridicule Int'l Norms
Foreign Ministry Spokesman Bahram Qasemi on Wednesday...
First-Timers Constitute 20% of Tehran Homebuyers
First-time homebuyers have accounted for a 20% share of total...
Iran Slips 1 Spot in WEF's Global Competitiveness Index
The World Economic Forum’s “Global Competitiveness Report 2018...