‘OMO to control, not to lower liquidity growth’

January 25, 2020 - 14:0

TEHRAN- Ali Eslami Bidgoli, a member of Iran’s Securities and Exchange High Council, says that Open Market Operation (OMO) system, recently launched by the Central Bank of Iran (CBI), should not be expected to reduce the inflow of liquidity into the market, while it is to control it.

Speaking to ILNA, Bidgoli explained, “What we have defined as an OMO system in Iran is somehow different from the global definition; so, we should moderate our demand from such system in our domestic market.”

On January 17, the Central Bank of Iran officially launched an open market operation system as part of its monetary policy to curb inflation as well as control interest rates in the interbank market and manage liquidity.

According to CBI Governor Abdolnasser Hemmati, the main purpose of open market operations is to control liquidity and inflation in the market.

“Typically, central banks conduct open market operations or buy and sell securities to achieve their macroeconomic goals, namely inflation control and economic growth stability”, the official said.

As stated by Seyed Bahaeddin Hosseini Hashemi, a banking and monetary expert, liquidity stabilization in the country will be the major result of launching the open market operation system in the banking system.

“The amount of liquidity in private sector has become like a flood and it should be controlled through systems like OMO”, according to Hashemi.

MA/MA

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