Bank of Israel Governor determined to curb inflation

Despite having a less aggressive monetary policy than the U.S. Federal Reserve, the Bank of Israel will keep inflation from reaching the high levels observed in Europe and the United States, according to Governor Amir Yaron on Monday. Israel’s inflation rate has reached 4%, much over the intended range of 1-3%, although it is still less than half of what it is at the moment in the US and the eurozone.

The Bank of Israel has increased its benchmark interest rate three times since April, from a record low of 0.1%, in an effort to rein in surging prices. By the next year, economists predict that the rate will be 2.75%.

Yaron stated at the Calcalist economic conference in Tel Aviv that the tightening process may cause discomfort in the short term, but it will prevent “greater pain” from rising inflation in the long run.

The U.S. Federal Reserve, whose leaders have endorsed a quicker, front-loading procedure, he claimed, is under more pressure and is moving more quickly than the Bank of Israel.

“At the same time, we are determined not to let it (inflation) get into the ranges (seen) in Europe and the United States, and more than that, to return it during 2023 to the target,” Yaron said.

He compared choosing the correct rate hike speed to using a motorway on-ramp. “You need to do it. Not too slow, not too fast.”