Economic expert Ziad Al-Hashemi commented on the Central Bank of Iraq’s measures to reduce interest rates.
Al-Hashemi said in a tweet on his account on the X platform, which was followed by “Iraq Observer”, that “the Central Bank of Iraq is following in the footsteps of the Federal Reserve and Western central banks, and reducing interest rates from 7.5% to 5.5% despite its failure to achieve its monetary goals.”
He added: “The major central banks around the world have reduced interest rates after inflation rates fell from 10% to less than 2%, confirming the success of the high interest rates followed by the major central banks during the past two years in curbing inflation.”
“As for (Iraq), the previous interest rates of 7.5% did not succeed in (withdrawing the hoarded cash) out of the banking system, which exceeds 80% of the issued dinar, and did not help in alleviating (the high inflation) that the citizen feels with the continued high prices of goods (which the Ministry of Planning is trying to cover up by issuing illogical statements indicating low inflation rates),” he continued.
Al-Hashemi pointed out that “despite not achieving the desired goals of the high interest, and the absence of an urgent and necessary economic need to reduce interest, and the absence of fears of the Iraqi economy falling into recession, and the absence of a need to encourage spending (which is already high), the Central Bank of Iraq suddenly decided, without clear reasons, to reduce interest rates.”
He explained that “such incomprehensible decisions remind and confirm that there is clear randomness in the decision-making process of the Central Bank’s management, as its decisions are based in many cases on the method of trial and error, reactions, or imitating and mimicking the decisions of others without study, and this is a clear and specific weakness in the way this institution works.”
He added: “The decision to reduce interest rates by the Central Bank of Iraq is merely a ‘formal measure’ with no reason. It was created to create a ‘fake impression’ among the public that the Central Bank’s measures were successful, just as the Federal Reserve and the Bank of England were successful in reducing inflation.
