Iran's parliament passed a law on Wednesday that requires the government and the Central Bank of Iran (CBI) to cut lending rates to single digits by 2010, a step critics say could fuel inflation.
The conservative Abadgaran faction, which dominates parliament, submitted the bill in January 2005 and has been discussing details since. The new law is in line with calls by President Mahmoud Ahmadinejad for lower rates to help the poor.
Critics fear that lower rates, along with Ahmadinejad's higher budget spending plans will fuel inflation in the world's fourth largest oil exporter. Inflation was 10.7 percent in the year to January.
"We had suggested five policies to curb the inflation and slash the interest rates subsequently," Mohammad Mehdi Mofatteh, spokesman for parliament's budget committee, told Reuters. But he did not specify what those policies were.
He was speaking after the parliament session, carried live on state radio, in which the new law was passed. The law still needs approval by the Guardian Council, a watchdog which checks that legislation complies with Islamic law and the constitution.
Central Bank Governor Ebrahim Sheibani addressed parliament on Tuesday, appealing to MPs not to put pressure on the central bank to lower rates.
Parliament rejected a proposal that rates be brought down progressively by one percent every six months until they reached single digits by 2010.
The new law leaves the same deadline but leaves it up to the central bank to decide how to meet the target.
Comments
Comments are closed.