Iran Bank Chief Looks to Tame Prices with ‘Independence’

Iran’s central bank governor Valiollah Seif said the administration of President Hassan Rohani has given the regulator more independence to curb one of the world’s highest inflation rates.

Seif, in his first interview with an international news organisation since taking office in August, said Rouhani’s cabinet has agreed to separate monetary and fiscal policies. That would allow the central bank to focus on “controlling liquidity and bringing down inflation,” which Seif said is the regulator’s main priority.

Rohani inherited an economy in recession as international sanctions against Iran’s nuclear programme weakened its currency and accelerated inflation to about 40% in September. “We are now facing stagflation,” Seif said on October 12 in Washington, where he was attending the annual meetings of the International Monetary Fund and the World Bank. “Expansionary monetary and fiscal policies will not help the growth.”

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The sanctions will reduce Iran’s foreign-exchange reserves to about $70bn by the end of this year, according to a study by the research firm Roubini Global Economics and Mark Dubowitz, president of the Foundation for Defence of Democracies.

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