Impact of Monetary PolicyonInterest Rate in Iran

Monetary policy is considered as one of the main economic tools, accompanying fiscal policies in forming a set of powerful items for applying economic policies.The main role ofmonetarypolicyis controlling money volume and liquidity.This paper reviews the impact of monetary policy on interest rate in Iran during 1352-1385 via OLS.To this aim, the relation between money volume and interest rate is investigated through ordinary least square method. The results indicate that money volume has on direct effect on interest rate. In addition, there is a direct relation between consumer price index and interest rate. Finally, a direct relation between national income and interest rate is concluded.