Iran's central bank sharply curbs liquidity injection to banks

Iran's central bank rejected most of the banks' liquidity demand in its latest open market operation, accepting only a small share, a move analysts link to reining in money creation and curbing inflation. According to a report by the Taadol newspaper on Wednesday, 22 July 2026, of roughly 3,610 trillion tomans requested by banks only about 500 trillion tomans, close to 14 percent, was approved.

The interest rate in the open market operation was reported near 23 percent and the overnight interbank rate around 23.8 percent. This restrictive stance comes as Iran's point-to-point inflation reached about 88 percent in the month to late June 2026 according to the Statistical Center, while banks' short-term funding shortfall persists. Limiting the injection of resources helps rein in liquidity growth on one hand, and on the other can deepen the banking network's financial squeeze.