Governor Of Iran's Main Bank Dismissed

TEHRAN, Sept. 22 -- Iranian President Mahmoud Ahmadinejad has dismissed Central Bank Governor Tahmasb Mazaheri and his replacement will be announced Wednesday, according to a Central Bank official who spoke on the condition of anonymity.

The Iranian news agency Farsnews reported Saturday that Ahmadinejad had replaced Mazaheri after an unspecified escalation in their differences over monetary policy and inflation.

The news agency said Mazaheri will be succeeded by Mahmoud Bahmani, the Central Bank's general secretary. Analysts say Mazaheri's dismissal removes a final obstacle to Ahmadinejad's plan to stop official subsidies and to distribute money directly to Iran's poor through special bank accounts.

Some analysts fear that the cessation of the government funding that keeps down the prices of gasoline, bread, electricity and other goods will cause inflation to soar. The plan's defenders say it is a long-needed overhaul of Iranian state spending. Inflation in August was 27.2 percent.

The Central Bank official, who is not authorized to speak publicly about the leadership of the institution, confirmed that a senior bank official would be named governor Wednesday.

Mazaheri was widely seen as one of the last remaining technocrats serving under the president, who has surrounded himself with his political backers. As bank governor, Mazaheri often openly disagreed with measures the government took to quell increasing living costs, such as the slashing of interest rates.

"Mazaheri's departure clears the path for Ahmadinejad to change the economy the way he wants," said Mohammad Atrianfar, a journalist, politician and critic of Ahmadinejad. "Mazaheri, who was much more professional than the president, would delay or alter government plans. Now the president has a free hand."