CBI: INTEREST RATES IN BANKS STILL HIGHER THAN INFLATION INDICATORS IN IRAQ

Thursday, 1/21/2010

Central Bank of Iraq, on Thursday, that interest rates in banks are still higher than inflation indicators in Iraq, indicating that the reserve bank's hard currency to U.S. $ 42 billion.

The adviser said the appearance of the central bank governor Mohammad Saleh said in an interview for "Alsumaria News", "The interest rate at the bank, amounting to 7%, higher than the inflation that exists in Iraq, which has a 6% according to statistics of the Central Statistical Bureau for 2009."

Saleh added that "the setting of interest rates in the bank depends on the level of inflation, which reflects the basis for index of consumer prices excluded from transport costs and fuel depends on the supply rather than demand," noting that interest rates are affected by shocks and economic fluctuations. "

It was the Iraqi Central Bank to cut interest rates from 9 to 7% last June to fit with the decline in the rate of inflation, which reached 7% in 2009.

According to Saleh, the director general of statistics at the Central Bank that it was "lowering interest rates one point in time to the present 6% to match inflation, which is one of the right things and affects in the economic development in Iraq."

The Central Bureau of Statistics and Information Technology of the Ministry of Planning and Development Cooperation is responsible for setting the rates of monthly and annual inflation, which depends on the basis of indices for commodity groups of foodstuffs, beverages and tobacco, furniture, medicines and medical services to determine rates of inflation in Iraq.

Advisor to the Governor, denied the central bank should "lead the process of reducing the interest rate one point to leave the capital abroad," attributing to the fact that "interest granted by the banks abroad is simple does not exceed 0,05% compared with the awarding of Iraqi banks."

Salih stressed that "the Iraqi Central Bank reserves reached the time being, only $ 42 billion, not counting reserves, the Iraqi government, including oil revenues," pointing out that "the reserve bank and the Iraqi government reached 80 billion dollars in 2008 due to high oil prices $ 147."

The CBI, with headquarters in Baghdad and has four branches in Basra and Sulaymaniyah, Irbil and Mosul, he founded the bank under the law of an independent Iraqi Central Bank of Iraq issued on 6 March 2004, and shall be responsible for the maintenance of price stability and the implementation of monetary policy, including exchange rate policies and management foreign reserves and the issuance of currency management, as well as to regulate the banking sector.

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