The policy of quantitative control over the balance sheet growth of the banking network has been pursued as a monetary policy by the Central Bank's Liquidity Committee from 2020 to 2024 (1399 to 1403 in the Iranian calendar) with the aim of curbing inflation by controlling money supply growth, a key factor influencing the general price level. In addition to this primary goal, balance sheet control in Iran has also encompassed objectives such as banking supervision and credit allocation. This study employs a Vector Error Correction Model (VECM) to investigate the effects of this policy on inflation and real output. It examines quarterly data spanning from 1990 to 2023 (1369 to 1402 in the Iranian calendar), considering M2 as the representative variable for liquidity to measure the success of the policy in controlling the quantitative growth of the banking network's balance sheet. The results indicate a statistically significant relationship at the 5% level between liquidity growth and inflation, demonstrating that, in the long term, reducing liquidity growth through this policy leads to a decline in inflation. However, the model did not identify a significant short-term relationship between liquidity growth and inflation. In the long run, reduced liquidity growth decreases demand across various markets, thereby limiting increases in the general price level. Moreover, a negative relationship was observed between the implementation of this policy and real output. This effect arises through the channel of credit constraints imposed on production. The policy led to a crowding-out effect within the credit allocation portfolio, resulting in reduced production capacity in some economic sectors. The recession caused by diminished demand, as a consequence of reduced liquidity growth, further exacerbated the decline in production capacity. Another key finding of the model is the significant short-term relationship between the nominal exchange rate and inflation, indicating that currency shocks can elevate the long-term average inflation rate in Iran.