Iranian President Mahmoud Ahmadinejad was forced Wednesday, January 25 to increase the bank interest rates, in a first effort to confront an economic crisis caused by European Union sanctions, M&C reported quoting AFP.
'The president accepted to increase the bank interest rates in line with the official inflation rate which is about 21 per cent,' central bank governor Mahmoud Bahmani told state television network IRIB.
Economic Minister Shamseddin Hosseini also confirmed on state television that Ahmadinejad had approved an increase of interest rates for long-term deposits.
After EU foreign ministers decided on Monday to embargo Iranian oil and freeze the accounts of the Iranian Central Bank, Iran's national currency, the rial, reached a record low, de facto losing half its value compared to the start of the year.
The Central Bank had previously decided to raise interest rates, to encourage the people to keep their rials in the bank, but faced harsh opposition by Ahmadinejad, whose economic policy principles have so far rejected the measure.
But the country's grave market situation eventually forced the president to revise his policies and increase the interest rates from 12 to a maximum of 21 per cent.
Ahmad Tavakoli, a senior lawmaker and critic of Ahmadinejad, had warned on Tuesday that the sanctions could provoke a serious economic crisis and lead the country towards bankruptcy if the government did not act.
