Governor of the Bank of Israel Amir Yaron at the Maariv/Maariv conference
Bank of Israel Governor Prof. Amir Yaron left the interest rate unchanged and it will continue to stand at 4.5% per year. To be honest, I didn't fall out of my chair. The decision makes sense despite the pain of the credit addicts. The decision mainly signals a lack of confidence in the budget policy of the treasury and the government and the fear of an outbreak of inflation.
Until a week ago, the almost complete consensus was that the monetary committee that will be accepted today will support lowering the interest rate by at least 0.25% per year. Inflation converged to the price target (2.5% per year), the exchange rate retreated towards NIS 3.6 per dollar and the credit rating by Fitch was not lowered.
However, in the last week there has been a change that proves how volatile and liquid the state of the economy is, as well as the Israeli government's policy regarding the fate of the abductees. First, inflation expectations rose again. The research division of the Bank of Israel estimated that inflation in 2024 will amount to 2.8%.
But the assessment of Bank Hapoalim's economic department was more conservative. The inflation forecast of the bank's economists for the 12 months rose to 3.2%. The Bank of Israel did not change the growth forecast for 2024, which will be 2%.
Yaron and Netanyahu. The state of the economy is volatile and liquid, as is the Israeli government's policy regarding the fate of the abductees / Amos Ben Gershom / L.A.M.
The rise in inflation expectations is no accident. The Iranians spoiled the inflation war plans and Israel started preparing for an attack. The increase in tensions and the fear of another front in the north, jumped the dollar to a record of 3.77 which has since started to fall.
The strengthening of the dollar embodies the potential for price increases. Another inflation generator is the oil prices that have started to rise again. The position of the world's central banks, led by the US Fed, which rules out lowering interest rates in the immediate term, is also cooling the enthusiasm.
Last week the Governor of the Fed reduced expectations against the background of the American economy data and clarified that the rate of interest rate cuts in the coming year will be low. And yet the Bank of Israel's decision was met with great disappointment, mainly on the part of the business sector.
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The Bank of Israel has decided: the interest rate remains unchanged at 4.5%
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The main beneficiaries are the banks. The overdraft and mortgage consumers are moaning about the mandatory interest rate of 10% per year / Shlomi Gabai, Flash 90: Olivier Pitousi, Yossi Aloni, Yonatan Zindel
The main beneficiaries of the decision are the banks (the profit will be reflected in the results of the first quarter for 2024) and the main victims left on the side of the road are the credit consumers.
Even if it is true that the central goal of the Bank of Israel is the fight against inflation and the desire to prevent an outbreak that would disrupt the activity of the economy, the Central Bank of Israel has social goals according to the law. One of the most important is reducing the gaps in society.
A high interest rate widens the gaps between the capitalists who end the month in peace and those who hardly start it. While the owners of the funds fight for every comma increment in the interest rate and in the best case it reaches 4% per year, the consumers of the overdraft and mortgages groan at a mandatory interest rate of 10% per year.
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Amir Yaron
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