Interbank interest rate pullback from 7-year record/bank money demand is managed in the night market

According to the economic reporter of Fars news agency, the central bank publishes the interbank interest rate in its statistics board every week; The interbank interest rate dropped by 700% in the second week of May this year, after touching its seven-year record in the first week of May. However, this rate is still near the ceiling of the corridor.

New Central Bank statistics show that the interbank interest rate has reached 23.55%. This rate was 23.62% last week, which has decreased in the last week.

In February of last year, the central bank raised the interbank interest rate corridor and raised it to 17-24%. Despite the growth of the corridor, this index is now closer to its ceiling and is stuck to this level. Some analysts believe that the reason for this issue is the severe debt situation in the banking system.

One of the most important reasons for the growth of the interbank interest rate up to the limit of the new ceiling has been the bad liquidity situation of banks with deficits and the growth of demand in this market.

* Increase in the price of money with the growth of the interbank interest rate

Analysts consider this rate as an indicator that increases the cost of borrowing by banks in the money market, and its increase can be considered contrary to the growth of inflation in the country.

This important economic index can be considered one of the most important economic data in Iran and is always called the price of money in economic literature. For this reason, some believe that inflation control in the country can be achieved by liberalizing the interest rate.

The debt of the banks to the central bank is one of the most important indicators of the growth of the monetary base and in this way it can fuel the increase in inflation in the country. The increase in bank interest rate can become a factor in making bank borrowing more expensive, and this issue can also have a great effect on curbing inflation. Inflation has reached high records in the country in recent months and of course it is still on an upward slope.

When this index was at low levels, some believed that this issue could cause the growth of excess demand in the interbank market. Increasing this rate can reduce this excess demand.

Money and banking experts believe that when the demand for any product is high and its cost is at a low level, excess demand is created. The creation of excess demand for money at low interest rates in the interbank market fuels the debt of banks to the central bank. For this reason, the central bank decided to increase the range of interest rates.

* Psychological effect of interest rate on the capital market

Sadegh Mohebi, an economic expert, in an interview with the economic reporter of Fars news agency, said: One of the most important factors in the reduction of the interbank interest rate is feeding needy banks through the open market in order to somehow manage the demand in the night market. An issue that has led to a slight drop in the interbank interest rate at this point.

He continued: The interbank interest rate does not directly affect the capital market. The interbank interest rate is an overnight rate that banks lend to each other and is a kind of interbank borrowing rate that is settled.

This economic expert explained: The interest rate and interest of deposits that we know and which has a direct impact on the capital market is different from this rate. But this rate is not meaningless and the increase of this rate shows that banks have not been successful in attracting liquidity.

Mohebi emphasized: In general, the increase in the interbank interest rate has a psychological effect on the capital market.

Therefore, the report, although the high levels of interbank interest rates can be considered an effective factor in preventing the increase in the inflation rate in the country, but the growth of this index in recent weeks shows the growth of money demand in the banking system, which is another sign of It is considered inflation.

Considering that the interbank interest rate is close to its three-month high, it seems that this corridor will experience another jump in the coming weeks.

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