JERUSALEM (Reuters) – Israel’s foreign minister criticized the Bank of Israel for raising its benchmark interest rate again on Monday and said he supported a process that would halt further rate increases.
“In the context of moderating inflation, there was no justification for today’s interest rate hike,” Foreign Minister Eli Cohen wrote on Twitter.
In response, Bank of Israel Governor Amir Yaron suggested that Cohen look at current data – which show inflation continuing to rise – while respecting the central bank’s independence.
Israel’s inflation rate hit a new 14-year high of 5.4% in January, prompting the central bank to raise interest rates by half a percentage point at a policy meeting on Monday to 4.25%, it’s eighth hike since last April.
Cohen wrote that he had asked Israel’s finance minister to “formulate an outline” with Yaron to stop more interest rate hikes.
Yaron later said: “It’s of course desirable, certainly as foreign minister, that he understands the importance of the central bank’s independence. In all countries where the central bank was harmed, we know what the final result was.”
Deputy Bank of Israel Governor Andrew Abir told Reuters that more interest rate increases were likely, to battle “sticky” inflation and to show the bank’s determination to move the inflation rate back to a 1-3% target range.
(Reporting by Ari Rabinovitch and Steven Scheer; editing by James Mackenzie and Susan Fenton)
