Israel’s foreign minister Eli Cohen condemned the country’s central bank for raising interest rates for the eighth time since April, urging the government to intervene to end the cycle.
(Bloomberg) — Israel’s foreign minister Eli Cohen condemned the country’s central bank for raising interest rates for the eighth time since April, urging the government to intervene to end the cycle.
In a rare call by a senior state official to rein in the Bank of Israel, Cohen said Monday there was “no justification” for the decision to increase the benchmark rate to 4.25% from 3.75%, the highest since the financial crisis in 2008.
“I’ve asked Finance Minister Bezalel Smotrich to formulate a framework with the Bank of Israel governor to end the interest rate hikes,” he said on his Twitter account. The move “continues the mistreatment of mortgage holders,” he said.
It was not immediately clear whether the comments indicate a change of approach from the new government under Prime Minister Benjamin Netanyahu, who resumed power as head of a coalition with far right and nationalist partners late last year. But his government has already gone into battle against the judiciary, pushing to limit its influence and increase the state’s ability to appoint judges, sparking widespread protests.
“Foreign Minister Cohen would do better to delve into the data,” Bank of Israel Governor Amir Yaron said. “It is desirable of course, certainly as foreign minister, that he understand the importance of an independent central bank. In every country in which there was damage to the central bank, we know what the end result was.”
The Finance Ministry didn’t immediately comment.
The monetary policy committee didn’t indicate when it plans to end the tightening cycle, a response in part to inflation which climbed an annual 5.4% last month to a 15-year high. Israel’s economy also surprisingly accelerated in the fourth quarter of last year, though a political backlash against the government’s plans to reshape the judiciary has become a drag on sentiment in 2023.
(Updates with governor comment in fifth paragraph.)
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