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Iranian state banks raise interest rate by 7% to 25%: Report

Photo shows a view to a branch of the state-run Bank Melli Iran.

Iranian state banks have raised their interest rate by 7% to 25%, according to a report published in local media and more than a week after senior government authorities indicated they plan to hike the rates to stem inflation.

The Sunday report by Tasnim news agency said that state banks in the capital Tehran had already started offering the 25% interest on deposits while charging rates of 24% to 25% for lending.

There has been no official confirmation of the new rates from the Central Bank of Iran (CBI) or from the Iranian finance ministry (MEFA). Any increase in Iran's official interest rate, which is currently at 18 to 20 percent, should be approved by the country’s High Council on Money and Credit which consist of senior CBI and MEFA officials.

The reported increase in interest rates in Iran come more than a week after the CBI authorized banks to issue deposit certificates with a rate of 23%. The decision was widely regarded in economic circles as a prelude to raising the official interest rate in the country.

CBI’s new chief Mohammad Reza Farzin, who was appointed to the job earlier this week, has defended plans introduced by his predecessor Ali Salehabadi to raise interest rates.

Farzin told state TV on Friday that the CBI would count on higher rates as a means of controlling high levels of inflation in Iran.

Official government figures released last month show that consumer prices in the country had risen by 45% in the year to late December.

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