Such threats, which have been raised by opponents of Tayebnia’s taxation proposal, seem to be genuine. The actual rate of return for Iranian depositors has been negative for the past three decades, as inflation has always been higher than deposit rates offered by banks. This means that depositors have had negative income, meaning their income could not have been taxed.
The current situation is the first time in three decades that inflation has stood much lower — nearly 8 percentage points — than the deposit rate ceiling. Many economists believe the reason behind lower inflation in recent years has been recession and not the government’s monetary discipline. This argument appears to make sense, given that the money supply has more than doubled since the current government took office in 2013 — a phenomenon that should normally have led to a hike in inflation.
Nevertheless, it seems that the tide is turning against the CBI governor, who has been in office for nearly three years now. Concerns over Seif’s competence as the monetary policymaker emerged in April, immediately after he told Bloomberg television that his country had gotten “almost nothing” from the JCPOA, arguing that European banks have remained wary of dealing with their Iranian counterparts. Advocates of the nuclear accord did not find his remarks to their liking, and deal critics took the opportunity to further divide the economic team of President Hassan Rouhani.
As Rouhani’s economic team is trying to settle internal disputes in the very last year of the president’s first term, ultraconservative media are losing no time in theorizing why Seif must immediately leave office. Indeed, the ousting of 64-year-old Seif now appears likely — though not any time soon. He and Tayebnia are currently too busy trying to finalize a long-awaited bill that seeks to make radical changes in banking regulations and the central bank’s structure.