Iran’s banks agree to cut rates to 20%

Iranian banks are to lower their annual deposit rate to 20 percent, the country’s media reported on Saturday.

Abdolnasser Hemmati, the governor of Bank Mellat, has told reporters that the decision was adopted at a meeting of private and state banks earlier in the day.

Hemmati, who is also the chairman of the Council of Iranian Banks, said the decision was adopted by considering the viewpoints of the government as well as the fact that Iran’s inflation had lowered over the past months.

He added that the lending rates have also been decided to be reduced by between 2 and 3 percentage points.

These, Hemmati added, will be accordingly communicated to the Central Bank of Iran (CBI), adding that the changes could take effect as soon as May 5. The official further expressed hope that the grounds would be prepared for further cuts in deposit and lending rates in the future.

The CBI says Iran’s annual inflation that once stood at well above 34 percent in 2013 has presently dropped to as low as 15 percent. Akbar Komeijani, a top CBI deputy governor, says this has already provided enough justification to lower the deposit rates of banks that are “unnecessarily high” specifically at a time of meager national economic activity.

“There is a significant difference between the return of investments in the capital market and that of other markets,” Komeijani said. “This can eventually upset the performance of other markets. Therefore, rates need to be lowered in pace with the drops in the inflation rates so as there would be a better balance between the developments in the national economy and the return of investments in various markets”.

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