CBI chief sets monetary discipline, FX stability as priorities to curb inflation
Head of Central Bank of Iran’s Abdolnaser Hemmati on Monday outlined the bank’s approach to containing inflation and managing economic pressures at a meeting of central bank governors of Islamic countries, emphasizing monetary stability and coordinated policymaking.
Speaking at a meeting of central bank governors of Islamic countries in Istanbul, Hemmati said the approach included strengthening monetary discipline, managing exchange-rate fluctuations and maintaining transparent communication, as external shocks and economic uncertainty continued to weigh on the economy, according to IRNA.
Hemmati said the uncertainty facing Iran’s economy was complex and multifaceted, with much of the volatility stemming from external pressures, sanctions and geopolitical risks that have coincided with balance-of-payments constraints and fiscal risks.
Iran’s national currency has fallen to record lows, with the US dollar trading above 2 million rials on the open market in recent weeks. The depreciation has highlighted growing pressure on an economy already facing high inflation.
Iran’s 12-month consumer inflation rate reached 69.9% in the fifth month of the Iranian calendar year began on March 21, according to the Statistical Center of Iran.
The country has also remained on a war footing since a US-Israeli coalition launched attacks in late February, particularly targeting civilians and infrastructure during a 40-day conflict.
Hemmati said in Istanbul that external pressures were deliberately focused on fueling “perceived inflation” and turning economic pressure into public discontent. He said the central bank could not and should not take a passive approach to how external shocks were transmitted to the domestic economy.
To contain currency fluctuations, Hemmati said the central bank was pursuing policies including monetary discipline, limiting banks’ balance-sheet growth and preventing the monetization of budget deficits.
Direct financial channels with Tunisia
On the sidelines of the Istanbul meeting, Hemmati also held talks with the central bank chiefs of Turkey and Tunisia.
Hemmati and his Tunisian counterpart, Fathi Zahir Ennouri, stressed the need to expand monetary and banking cooperation, set up direct financial channels and remove obstacles to correspondent banking ties between Tehran and Tunis, ILNA reported.
Hemmati said direct financial channels and smoother correspondent banking relations were prerequisites for expanding trade and joint investment.
Ennouri welcomed the proposals and described the meeting as the start of a new phase in banking cooperation between the two countries, while stressing the importance of greater convergence among Islamic states in monetary and financial affairs.
The two sides agreed to form expert working groups to examine practical ways to facilitate financial transactions and support businesses and traders, a step that could ease one of the main obstacles to bilateral trade: access to smoother banking and financial channels.