KTFA
FRANK26: "LOW INFLATION = SECURITY AND STABILITY FOR THE MONETARY REFORM & FOR THE FLOAT.".......F26
Central Bank Policies Result in Lower Annual and Core Inflation in 2024
3/6/2025
Samir Al-Nusairi
The Central Bank announced, within the monetary policy indicators for the fourth quarter of 2024, a decrease in the annual inflation rate to 2.8% and the core inflation rate to 2.5%, compared to 4% and 4.5%, respectively, for the same quarter of 2023.
It is one of the objectives of monetary policy that the Central Bank is working on according to the policies and procedures adopted since 2023. This means controlling the general level of prices, which is a basic objective of monetary policy that confirms the soundness of the steps and the fixed approach of the Central Bank in achieving all the objectives contained in its applicable law. The objectives of the Central Bank's monetary policy
( MONETARY REFORM -F26) are to achieve economic growth and stability. (SECURITY -F26) In the extremely complex economic, security and political conditions in 2024 that the world is going through and that our country is affected by. Especially the countries of the geographical region in which our country is affected negatively and positively.
Our economy has suffered from these conditions for decades, due to the rentier nature of the economy and the dependence of 93% of the general budget allocations on oil revenues, which constitutes about 60% of the gross domestic product. While the effective productive economic sectors, namely agriculture, contribute 3% to the gross domestic product and industry does not exceed 2%, as indicated by official data from the Ministry of Planning. Despite the development in the contribution of the two sectors in 2024, these are indicators that confirm the necessity of supporting, activating and revolutionizing the real sector to contribute to sustainable development and address the shortcomings in the local product and its failure to cover the consumption needs of citizens in food and other basic materials. Therefore, there was almost complete reliance on imports for the private commercial sector, and internal trade was not controlled and foreign trade was not regulated. There was also weak control over illegal trade and unofficial border crossings.
This affected the monetary and commercial market, and exchange rates and prices of imported and necessary goods and materials rose at high rates during 2021 and 2022. Therefore, the inflation index was the most prominent challenge facing monetary policy and directly affected the stability of the exchange rate. This led the Central Bank to take many measures in cooperation with the government in 2023 and 2024 to regulate foreign trade financing, control foreign transfers, regulate the global financial and banking system, comply with international standards, and leave the electronic platform. And begin implementing its third strategy for banking reform and classification in all its basic links at the level of internal and external banking transactions.
The most prominent of which is securing foreign transfers through direct dealings of our banks with international correspondent banks, which have reached 20 Iraqi banks so far, using 8 foreign currencies, namely the US dollar, the European euro, the Chinese yuan, the UAE dirham, the Indian rupee, the Turkish lira, the Jordanian dinar, and the Saudi riyal. (BEHOLD THE BASKET!!! -F26) Through analyzing the indicators of the general and basic inflation rate conducted by the Central Bank and in comparison with the rates of inflation rates achieved in Arab and regional countries.
Official data shows that inflation rates in most countries with unstable economies have reached very high levels. In Turkey, it reached 80.2%, in Sudan, it reached 11.4%, and in Iran, it reached 40%. In the Maghreb countries with relative economic stability, Tunisia, Algeria, and Morocco, it reached 9.3%, 9%, and 5%, respectively. In Egypt, it reached 37.4%, and in the Gulf countries with stable, oil-rich economies, it ranged between (2.4%-4.8%). This confirms beyond doubt that the strategy and measures of the Central Bank during the past and current years have achieved one of the basic objectives of monetary policy, which is to reduce the inflation rate and maintain the general level of prices of goods and services.
It is currently working to achieve other goals, which are the stability of the exchange rate and maintaining a foreign exchange reserve that covers the local currency in circulation and imports, increasing the gold reserve and reducing the percentage of local currency exported. (ALL OF THIS HAS BEEN ACCOMPLISHED AS OF TODAY -F26) Therefore, the economic results and outputs in 2024 confirm that the policies and procedures undertaken by the Central Bank have achieved an important goal of its goals to achieve stability in the monetary system, which is an important step in achieving other goals of monetary policy. (LET’S ROLL!!! -F26)
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