Central Bank of Iraq to curb inflation swiftly

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Economics
Central Bank of Iraq to curb inflation swiftly
Wednesday, November 09, 2011 18:06 GMT
On Sunday, Central Bank of Iraq revealed, its willingness to intervene to curb inflation in the event it reaches two decimal ranks. It is necessary to review the general budget’s operating expenses, Central bank called, noting that many expenses in the operational budget are inaccurate.
“For the first time since 20 years, Iraq’s annual inflation rate decreased to reach a one decimal rank, i.e. 3/10 in February 2011. Afterwards, the rate gradually increased to reach 7.6/10 in August and then slightly decreased to 7.3/10 in September 2011”, “deputy governor of Iraqi Central Bank Mazhar Mohammad Saleh told Alsumarianews.
“Central Bank of Iraq (CBI) is monitoring inflation indicators in Iraq and their gradual increase during the last few months,” Saleh said. “CBI monetary policy is capable of containing inflation,” he informed. “The bank can therefore interfere swiftly to stop inflation in the event it reaches stages that shake stability at about two decimal ranks i.e. 10% or more,” he added.
“Inflation in Iraq is mostly imported due to foodstuffs import, international oil prices’ increase in addition to the upsurge of houses rent prices” Saleh uttered. “CBI can deal with inflation through the right use of its monetary tools,” he declared. “The bank controls therefore cash flow rates to support and hold up Iraqi currency and uses exchange signals and interest rates to boost Iraqi Dinar’s purchasing power,” he clarified.
Deputy governor called Iraqi government “to fully reconsider general Iraqi budget’s operating expenses by means of reengineering and reviewing the operational budget.”. “There is a huge dissipation of resources in the operational budget,” he pointed up.
“There is a lot of inaccurate spending in operational budget as well as impotent administration, corruption, mismanagement, wasting of resources and inaccurate expenses,” Saleh revealed. “Many institutions established since Iraqi government’s formation in 2003 are not effective anymore,” he added.
August 28, Central Bank of Iraq announced, that inflation rate increased to more than 7% in July. Monetary policy will curb this increase and absorb a part of the demand pressure as well as inflation expectations, Saleh stressed uttering concerns over the increasing rates despite the fact that it is still lower than 10%.

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