Page 12 - Iran OUTLOOK 2025

4.0 Inflation & Monetary Policy
• 4.1 CPI
Iran's inflation story in 2024 shows encouraging signs of moderation, with the Consumer Price Index dropping significantly from 44.58% in 2023 to 31.2% by September 2024. To understand the significance of this decline, it's worth noting that this represents the lowest inflation rate Iran has experienced since May 2021, marking an important shift in the country's price stability.
The downward trend became particularly notable in the latter part of the year. The Central Bank of Iran reported inflation at 37.3% in the period ending November 20 – a four-year low. This improvement continued into December, when the Statistical Centre of Iran recorded a further decrease to 32.5%. These figures from two separate official sources help confirm the broader trend of declining price pressures.
The International Monetary Fund's projections add another layer to this picture. The IMF expects Iran's inflation rate to settle at 31.7% for 2024, down from 40.7% in 2023. This forecast suggests that while the improvements are substantial, Iran continues to grapple with inflation rates that remain well above global averages.
• 4.2 Monetary policy
Throughout 2024, the Central Bank of Iran (CBI) maintained its benchmark interest rate at 23% as part of its monetary policy framework. In February, the central bank introduced special fixed-term deposits offering 30% annual interest rates through state banks, aiming to attract liquidity into the banking system and discourage capital movement into foreign currencies and commodities.
The monetary base expanded to IRR11,130,300bn by June 2024, reaching an all-time high. This development occurred against the backdrop of the CBI's ongoing efforts to manage liquidity within the economy. CBI Governor Mohammad Reza Farzin emphasised currency stabilisation as a key priority, advocating for legal measures to restrict the use of alternative currencies in domestic transactions.
The central bank's long-term monetary strategy was outlined in its
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