Inflation in Iran has turned into a complex, multi-layered economic problem that cannot be solved with a single tool or a simple political decision. Economists surveyed by IRNA argue that suppressing prices, restricting demand, or relying solely on monetary tools such as liquidity control or interest rates will not break the inflationary cycle.
Inflation control is only possible when the regulator simultaneously manages the money creation mechanism, directs financial resources toward production, prevents supply shocks, and protects the purchasing power of vulnerable groups while avoiding the emergence of a new wave of inflation.
After decades of inflation accompanying the Iranian economy, this problem cannot be explained merely by the growth of the money supply or demand. In addition to political factors, sanctions, and blockade conditions, the combination of imbalances in monetary, currency, fiscal, trade spheres, and on the supply side has made price increases one of the most persistent and painful problems for households.
In this environment, the regulator does not face a simple choice between raising rates or controlling liquidity; it must simultaneously manage bank behavior, budget deficits, currency flows, repatriation of export revenues, capital flight, supplies of essential goods, and public purchasing power.
The article emphasizes that the success of anti-inflationary policy becomes evident when the 'unruly horse' of inflation comes under control. Furthermore, curbing inflation does not mean an immediate drop in prices; it means the regulator has taken control of the inflation generation process and slowed its pace. The recent slowdown in inflation over two months, reflected in Central Bank statistics, has instilled hope for improvement in the coming months. However, this success was achieved through liquidity management and strict Central Bank policy requiring banks to adhere to monetary discipline and prevent money creation.
A review of economists' opinions shows that the recipe for curbing inflation lies in a combination of fiscal and monetary discipline, control over bank balances, management of interbank interest rates, directing loans to productive sectors, strengthening supply, stabilizing currency and trade policies, and providing targeted support to the least affluent segments of the population.
Implementing such a package requires coordinated action between the government and the Central Bank, as well as the exclusion of temporary and contradictory measures.
Experts agree that inflation in Iran in recent years is more rooted in supply shocks caused by war, sanctions, and shortages of production resources than in money printing or growth in liquidity. Kamran Naderi, a university professor, asserts that the supply shock caused by war cannot be cured by monetary policy. When a sea blockade stops trade, raw materials cannot be imported, and essential goods and oil cannot be sold, which inevitably leads to price increases. Even if the Central Bank controls interest rates, this structural inflation persists.
Economic analyst Majid Shakeri holds the same view. For instance, in food supply, both import and blockade/sanction pressure must be considered. Therefore, having an answer to the blockade—whether economic or military—is itself a valid answer to inflation. These views demonstrate that monetary policies, including bank balance control or interest rate setting, are only partially effective; other economic measures must also be applied.
Economic expert Hassan Hassan-Hani, focusing on supply shocks, notes that the economy is facing recession and unused production capacity, with many production units operating below real capacity. In his opinion, the main source of inflation is shocks. Problems hindering the supply of production resources and goods have a significant impact on inflation. University Professor Morteza Ezati warns that if policy is conducted incorrectly and goods become scarce in the market, inflation will sharply rise again.
Inflation in Iran has been beyond a purely monetary phenomenon for many years; today it is a multifaceted problem. The first question in policy development is whether one specific tool—such as raising interest rates or limiting bank balance growth—can fight inflation and stop price increases. Majid Shakeri insists that to curb inflation, one must first understand its components. Inflation is not eliminated simply by suppressing demand, as the economy simultaneously requires recovery, production growth, and relief from supply-side pressures.
Kamran Naderi also emphasizes the need for the simultaneous use of several tools. Among monetary instruments, the interest rate is particularly important, followed by bank balance control and reserve requirements. If the Central Bank can control the interbank interest rate, the growth of the money base will also be controlled to some extent automatically. Thus, the general consensus among experts is that curbing inflation requires a coordinated set of policies. The main disagreement concerns how much weight each of these measures should carry in Iran's current conditions.
One of the most important tools proposed by experts is the control of the banking system and preventing banks from creating money. Uncontrolled growth in bank balances can intensify money creation and exacerbate inflationary pressure. Naderi believes that the Central Bank must pursue two directions simultaneously: managing the interbank interest rate and quantitative control of bank balances.
Under current conditions, a direct increase in deposit and lending rates is not necessarily appropriate. Instead of focusing on rates passed directly to people and producers, the Central Bank should manage the interbank rate. By controlling balances, it can organize banking activities and direct funds to the country's most critical needs.
Shakeri supports Central Bank control over balances, arguing that it helped reduce liquidity growth in recent months. The Central Bank can even use the disqualification of bank executives as an important deterrent for monetary discipline. Alongside liquidity control, the monetary regulator must determine which sectors should receive limited financial resources or strengthen the supply side. For example, if the price of essential goods rises, the regulator should not just reduce demand; it should plan for increased production or imports of those goods. This approach links monetary policy with industrial policy so that limited resources exert minimal pressure on production. Credit policy must become a targeted tool for solving specific economic problems, not a general policy without priorities.
Experts emphasize that part of inflation is driven by the supply side, and monetary policy alone cannot counteract this. Naderi views this as a consequence of sanctions and economic blockade. When trade is disrupted or foreign currency inflows decline, the economy faces a supply shock. Goods shortages naturally raise prices, and higher interest rates or limited liquidity cannot bring to market goods that do not exist. If the source of price growth is scarcity or a supply chain disruption, the solution must be sought on the supply side.
Shakeri argues that in the current climate, an economic response to trade restrictions and goods supply is part of anti-inflationary policy so that demand and supply can be balanced, and inflation does not grow from this area. Curbing inflation should not mean suppressing demand. Even in wartime, the economy needs production growth and recovery. The regulator must choose measures that yield the greatest results. Support for production should not turn into broad resource distribution or non-targeted exceptions. Resources must flow into sectors capable of increasing supply and eliminating inflationary bottlenecks.
The exchange rate is one of the most important channels for transmitting shocks to prices. Therefore, exchange rate stability is inseparable from anti-inflationary policy. Hassan-Hani believes that the main cause of inflation lies in erroneous economic policy. Curbing inflation requires simultaneous stability in currency, monetary, fiscal, and trade policies. Without coordination and a clear plan to support households, public trust cannot be formed. The exchange rate issue is not limited to the Central Bank's reserves. Even if export revenues are not repatriated into the official economic cycle, the currency market will remain unstable. Repatriation of export revenues and preventing capital flight must be central elements of currency policy. Until inflation is controlled, people cannot be expected to abandon speculation and engage in production.
In conclusion, the article asserts that a division of labor is necessary. The Central Bank must continue to control bank balances, manage the interbank interest rate, and prevent unwarranted credit creation. Credit restriction should not be blind; limited resources must be directed to sectors that increase supply and reduce inflationary bottlenecks. Budget planning and organization must prevent the transfer of budget deficits to banks and the Central Bank, as inflationary financing can nullify all efforts of the Central Bank. Regarding the currency front, priorities are political stability, repatriation of export revenues, preventing capital flight, and strengthening confidence in domestic investment. On the supply side, targeted imports, raw materials, elimination of production bottlenecks, strengthening trade, and maintaining the flow of essential goods must be part of the anti-inflationary program. Electronic vouchers can serve as temporary, targeted support, but only when using non-inflationary resources and with careful design.
Overall, the Iranian economy requires a multi-level anti-inflationary policy that simultaneously addresses money and interest rates, as well as currency, budget, banks, production, trade, and household welfare.