Why is the horizon facing declining inflation?

According to the Ibna reporter; This can be found in the statistics provided by the Statistics Center. Since the monthly inflation rate has reached 2% in December of this year, which is associated with a decrease compared to the same period in November. Also, the inflation rate of the country’s households in December has been estimated to decrease to 1.6 percent compared to the previous month.

But in the recent report of the Central Bank on price changes in the housing market, the reduction of housing prices in Tehran is clearly mentioned. The report says that the average price per square meter of housing in Tehran has decreased by 1.1 percent at the end of autumn compared to the eighth month of the year.

On the other hand, the Central Bank believes that December this year was a turning point in price trends. Because not only has point-to-point inflation declined after eight months, but asset markets have experienced stability and price declines. Regarding the reduction of prices in the housing market, the realization of price decline in December is an issue that did not happen for years in this month.

But the question is, what factors have played a role in halting the rising monthly inflation and falling prices in markets such as housing?

The answer to this question is clearly in the reduction of inflation expectations in the Iranian economy. To analyze this issue, we can point to the decline in the currency index in December this year compared to last year. Under the influence of the US election atmosphere in November, many had turned to false demand in markets such as foreign exchange, but unaware that the following month, the foreign exchange index not only did not increase, but also decreased.

But why did the exchange rate, especially the dollar, not only not increase but also decrease? The answer to this question is only related to the strong presence of the market maker and the answer to the real needs of the currency in the market. Specifically, in December of this year, the organized foreign exchange market under the supervision of the Central Bank officially began its activities, and with careful planning of the market maker, significantly contributed to the relative reduction and stability of the exchange rate.

On the other hand, the Central Bank, with specific measures to manage the growth of liquidity and at the same time meet the foreign exchange needs of the country’s imports, helped to eliminate the emotional atmosphere of the foreign exchange market. also Money and Credit Council In an effective and timely action, Controlling the growth of the banking network balance sheet Passed. An action that has been effective in controlling the growth of liquidity and curbing inflation.

According to many economists and economists; The trend in Iran’s economy is towards lowering inflation expectations. This issue was also mentioned in the recent speeches of the President. Dr. Rouhani emphasized: We will see the first effects of controlling inflation in December and we will be on the way to controlling the acceleration of inflation.

Also in early December, Dr. Hemmati, Governor of the Central Bank, announced the forecast of a reduction in inflation and said: “The Central Bank, given the calm in the markets and its outlook, while strengthening measures and seriousness to balance the foreign exchange market. , Will use all available monetary instruments to achieve targeted inflation. Macro-prudential policies to prevent the imbalance of the banking system and its effect on monetary variables and inflation are on the agenda of the Central Bank. In this regard, the Monetary and Credit Council has already approved control of the growth of the banking network balance sheet They will soon announce the approvals and ceilings set for the growth rate of banks’ assets. Given the significant change in inflation expectations in recent weeks, it is hoped that these measures will reduce inflammation and inflationary uncertainties and provide a better platform for business activity and strengthen investment and boost production by reducing expected inflation on the horizon. “

The reference of the Governor of the Central Bank to the efforts to create balance in the foreign exchange market is well reflected in the December statistics of the foreign exchange market. So that the price of the US dollar in the last month of autumn, with a significant decrease reached the lower channel of 25 thousand tomans. The drop in price, which compared to $ 32,000 at the end of October, shows the management of the foreign exchange market by the Central Bank in the midst of a full-blown economic war.

Regarding the importance of foreign exchange market management, it should be noted that the rate of decline in December of this year, while in the same period last year, the US dollar exchange rate during the last thirty days of the fall of 1998, faced a significant increase and climbed two channels. .

Also, the efforts of the Central Bank to prevent the government budget deficit from the resources of the country’s banking system have been successful to date and it is hoped that borrowing from bank resources will not continue in the year, although this important issue requires special attention of the government and parliament. Liquidity control by the central bank and its impact on inflation is to finally see the realization of inflation targeted by the central bank in June next year.