Has the promise of marriage failed? / The stock market’s anger over the fate of the 10-band package

According to Tejarat News, the interbank interest rate broke the 21% mark, while about 8 months have passed since Khandozi’s promise to stabilize the interest rate ceiling at 20%.

Yesterday, the central bank announced the interbank interest rate. According to this report, the interbank interest rate was announced as 21.14% in the last week of July 1401. The minimum repurchase agreement rate was also set at 20.91% and recorded the highest figure for this component this year.

Examining the changes in the interbank interest rate from the beginning of 1401 to July 23 shows that the interest rate has reached 20.36 to 21.14 percent. It should be noted that last year, the Minister of Economy set a ceiling of 20% for the interbank interest rate. Now with the breaking of this ceiling by central bank It can be said that the minister’s promise has also been violated.

What was the promise of marriage?

This happened while Seyyed Ehsan Khandozi had promised to stabilize the interest rate in December 1400 by observing the ceiling of 20%. This promise of the Minister of Economy was presented in the form of a plan known as the package of 10 measures to support the stock market. This plan was approved by the economic headquarters of the government and with the approval of Ebrahim Raisi, it was accompanied by serious criticisms from economists.

The tenth paragraph of this extensive package was: “The central bank was obliged to intervene in the interbank market and the secondary market and limit Interbank interest rate keep at the level of 20 percent.

This controversial clause was foreseen in this package, while economists considered it to be a violation of the basic principle of “central bank independence”. On the other hand, the Minister of Economy had strongly emphasized the need to preserve and respect the independence of this institution before when he was present in the 11th Parliament. Therefore, taking such a decision caused a contradiction in the country’s media, which caused doubts about Khandoozi’s position as the Minister of Economy.

What is the argument of economists?

In the context of setting the interest rate ceiling for the central bank, both government-oriented and mainstream economists agreed that the minister’s decision was incorrect. Mainstream experts and experts believed that in addition to violating the independence of the central bank, the implementation of this clause practically shows that the priority of the Ministry of Economy is not to curb inflation. On the other hand, statists and institutionalists also believed that the interest rate is a tool to control inflation and the government should not suppress the interbank interest rate by justifying the support of the stock market.

Why are the stock market angry?

The people of the capital market believe that the bank interest rate acts as a compass for wandering capital. In fact, due to the fact that the risk of depositing as well as borrowing between banks is much lower than investing in a market like the stock exchange, a competition has formed between the two. In fact, the shareholders of the stock exchange emphasize the fact that the reduction of the interest rate makes the capital owners (real and legal), especially banks, accept the risk of the stock market. This issue also naturally causes money to enter the stock market.

Many people of the market also believe that the 12th government and the central bank of the time in 2018 and 2019 encouraged people to enter the stock market by using this tool. In other words, by suppressing the interest rate, the central bank made people accept the risk of investing in the stock market for fear of inflation.

Now, the same group of stock market activists believe that the government should use this tool to grow and improve the situation of the stock market. The government of Ebrahim Raeesi had also made such a promise, but now with the breaking of the interest rate ceiling of the capital market, he is also disappointed with the promised support.