According to the International Iranian Stone Exhibition, the change in the direction of the central bank's monetary policy in moving towards an inflation targeting strategy with a focus on open market operations is a fundamental change from the targeting of monetary units to interest rate management.

According to Fars News Agency, quoting the public relations of the Central Bank, one of the important pillars in directing inflation towards target inflation (22.2%) is the management of inflation expectations, which requires providing accurate and timely information on macroeconomic developments and measures. Conducted by the Central Bank to individuals and economic actors.

This will, in addition to the correct formation of expectations, also provide the conditions for improving economic growth, and the central bank will pursue the goals of preserving the value of the national currency (controlling inflation) and contributing to economic growth in better conditions. Accordingly, the set of macroeconomic developments and the actions of the Central Bank in response to macroeconomic developments in February of this year are as follows.

1- Macroeconomic developments

With the reduction of inflammations in the foreign exchange market, the adjustment of inflation expectations and, consequently, the appearance of its general effects on the changes in the commodity price index, the downward trend of prices in the foreign exchange, gold and car markets and limited price growth in the housing market began. Continued. However, in February, following a significant increase in the index related to the food and beverage subgroup, the downward trend in the monthly inflation rate stopped; With the explanation that it is still less than its peak this year (October and November). In addition, the average purchase and sale price of housing increased in February compared to the previous month. These developments, along with the statistical evidence of previous years in the field of seasonal inflation pattern in the last months of each year, can indicate the continuation of the current situation in March.

Mainly with the aim of controlling the inflation rate and managing liquidity, the open market operation in February was also successfully implemented in order to stabilize the interbank market interest rate within the pre-determined interest rate corridor. In this operation, the central bank provides short-term credit (one week to 14 days) to the applicant banks in a competitive process in the form of a repurchase agreement. Banks can also meet their very short-term emergency needs by using regular credit rating at corridor interest rates. With the increase in the share of government bonds in the balance sheets of banks and the expansion of the capacity to use these tools, we are witnessing more discipline in the relationship between the banking network and the central bank.

The rate of return on Islamic treasury bonds at one and two year maturities in February was upward. The rate of return on one-year bonds in February increased by 0.68 percentage points from 19.14 percent to 19.82 percent compared to the previous month. Also, the rate of return on documents with a two-year maturity in February reached 20.34%, which shows an increase of 0.13 percentage points compared to January. The shift in short- and medium-term rates of return began in the second half of February, which could reflect policies aimed at calming the capital market as well as changes in inflation expectations. It should be noted that adjusting rates of return can help stabilize monetary conditions in the macroeconomy.

The shift in the central bank's monetary policy toward an inflation targeting strategy centered on open market operations is a fundamental shift from monetary targeting to interest rate management. However, until the new approach is fully implemented and the monetary diffusion mechanism is repaired, controlling the growth of monetary units will continue to be the focus of monetary policymakers to ensure that they do not accumulate risks that disrupt interest rate management while macroeconomic developments. Be.

In this regard, and with the growth of major monetary variables in the past few months and according to preliminary figures, the growth of liquidity and monetary base at the end of February this year compared to the end of the previous year, reached 33.8 and 23.6 percent, respectively. It should be noted that despite the difficult economic conditions and specifically affected by the prevalence of the corona and the need to use banking resources to alleviate it and cover the government budget deficit this year, with the management and active approach of the central bank monetary base growth has been properly controlled . With the appropriate measures taken by the central bank to manage bank overdrafts and to assist the government in brokerage government bonds, the monetary deficit was prevented from being monetized and the growth of the monetary base at last year's level (23.6%) remained unchanged.

However, the special circumstances caused by the outbreak of coronary heart disease and the need to support economic activities, as well as the increasing liquidity ratio due to changes in the ratio of excess reserves of banks, led to higher liquidity growth than last year. Of course, the behavior of banks in accelerating the creation of assets, which is mainly due to the more negative real interest rates, has played an effective role in liquidity growth and that is why the central bank has put a prudent policy on limiting the growth of banks' balance sheets. have given. The growth of liquidity components also shows the continuation of declining money growth, so that the 12-month growth of money decreased from 88.6% in October to 56.9% in February, which indicates the strengthening of deposit stability in recent months and confirms the reduction of inflation expectations. And long-term deposits in banks are more welcome.

2- Actions of the Central Bank

 In February of this year, in order to regulate the interest rate of the interbank market, the Central Bank, in interaction with banks, took the following measures:

• Carrying out open market operations with a total value of 252.8 thousand billion Rials in the form of a repurchase agreement with maturities of 12, 14 and 16 days (the balance of the repurchase agreement from the place of open market operations was 93.3 thousand billion Rials at the end of the month).

• The use of regular credit by banks to meet the needs of emergency liquidity in 23 cases worth a total of 350.7 thousand billion rials (at the end of December, regular credit was 119.5 thousand billion rials).

 Providing $ 32.2 billion in foreign exchange for the import needed by the country's economy in the eleven months of this year (of this amount, about $ 9.3 billion is allocated at a preferential rate for the import of basic goods, medicine and medical equipment).

 Efforts to contribute to economic growth and reduce the effects of coronary heart disease on production through:

• Extension of the debt deferral period of production units until September of next year for those units that all or part of it is non-current for a maximum of five years by taking 7.5% of the debt and breathing for six months

• Implementation of the use of productive certificates (steps) with the aim of effective financing of economic sectors through non-inflationary routes

 Financing government expenditures in the form of sale of government bonds through the Central Bank brokerage amounting to 104.2 thousand billion rials in February of this year (accordingly, the total amount of government bonds sold in 34 auctions held by the end of February of this year is equal to 1091.2 thousand billion rials have been).

 Due to lower inflation expectations, the need to change the interbank market interest rate has not been recognized and the central bank has implemented monetary policy in such a way that the market interest rate is directed towards the policy rate.