Dr. Farzad Vajihi: Curbing Inflation Only By Reforming Economic Policies

Vajihi stated that until we can control the variables of the supply and demand side of the inflation rate, we cannot control the inflation rate, and said: In the last decade, the inflation rate has been more affected than the cost side.

Spotlight Desk

Updated on: 3 February 2023 6:36 am

Dr. Farzad Vajihi

Dr. Farzad?Vajihi, a financial expert and economic advisor of the Youth Forum, in a conversation with reporters, considers the root of bank inflation to be the high amount of overdraft facilities, the negative ratio of banks' capital adequacy, and of course, the government's debt to the banking network.?

He added: In addition to the effect of banks' dissatisfaction on the inflation rate, high government spending is another engine of inflation.?

??Vajihi?introduces the increase in the general price index, especially in the 90s, mainly due to the currency shock, as another reason for the high inflation rate in economy.?

? This economic expert believes: if the goal is to control inflation, it is necessary for the government to adopt a contractionary policy; As a result, it is not possible to intensify the expansionary monetary policies and debt relief; Therefore, we need a comprehensive program that is compatible with inflationary conditions.?

Vajihi?stated that until we can control the variables of the supply and demand side of the inflation rate, we cannot control the inflation rate, and said: In the last decade, the inflation rate has been more affected than the cost side.?

? Of course, in addition to the effect of the increase in the exchange rate on inflation, government policies have also affected the inflationary situation; Because when the government has a budget deficit, it tries to increase its revenues and increases the price of some goods and services.?

The economic advisor of the Youth Forum stated: Globalization increases the role of external factors in the inflation process and reduces the role of internal factors.?

He said: The definition of recession is different all over the world, but it generally includes the prospect of shrinking economies and the possibility of high inflation in the "stagnation" scenario.?

As for inflation, the World Economic Forum survey is mixed across regions, with most economists expecting contractionary policies to continue in Europe and the United States.?

Vajihi?emphasized: Countries have no choice but to use anti-cyclical policies, strengthen institutions, including greater independence of the central bank, and establish an effective financial environment to ensure macroeconomic stability in order to protect their domestic economies from the negative consequences of global shocks.?