Governor of the Bank of Israel, Prof. Amir Yaron, yesterday raised the interest rate in the economy by 0.75%, to a level of 2%. The increase in the interest rate shows the Bank of Israel’s surprise at the rate of inflation in the economy, which – after the publication of the July index – stands at 5.2%, above the target set by the central bank (1%-3%).
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President of the Association of Manufacturers and Chairman of the Presidency of Employers and Businesses in Israel, Ron Tomerspoke today (Tuesday) with Anat Davidov on 103FM and commented on the decision: “The subject of interest concerns everyone who is open to credit, and as much as we know that no one guarantees us a fixed interest rate forever, no one anticipated the rapid rate of interest rate increases. Therefore, people Many in their financing plans did not build on such a return.”
Inflation here is low, about half and maybe even less than most of the world, so even if you have to use a stick to suppress it, a smaller stick can be used. The second thing is because some of the reasons do not depend on the State of Israel and the demands, for example the rising cost of energy, therefore the suppression here will not be as effective as the suppression of interest against the great inflation of the 1980s,” he added.
According to him, “We saw the last dimension and therefore I accepted the current interest rate hike, which is very aggressive. I just called on him to hope and try that this hike will be the last for the near future. We have air, we raised the interest rate, let’s see what effect it has on the economy and we will not run after the whole world With sticks and stones to suppress inflation because it is not certain that they will be the effective tool to the same extent as they were in the past.”
“I definitely called in the past and still call today to be more moderate in raising interest rates. I think we took a slightly too aggressive step, I think that businessmen who are used to taking risks on themselves could have taken more breath. In the end, the people don’t understand, but some citizens still don’t understand what kind of trouble is coming their way because they are exposed to mortgages and will start to see the increased payments only then will they understand it. They need to be helped because it is not easy for them and for businesses, exposed businesses and this thing can be devastating.” , said.
Later, Tomer said that the political instability also influenced the decision of the governor of the Bank of Israel. “The political instability is dramatic, both in the lack of a budget, and also additional measures that another government could have taken, a government that is not in an election period, this government as a transitional government is prevented from doing them,” said the president of the manufacturers’ association and added that “a large part, for example if you want to moderate prices, is related In all kinds of things, costs depend on the government. We all understand this government, as a transitional government, its hands are tied. The responsibility is only on the governor, he is the only one at the forefront in terms of decision-makers, so with all my regret I said it is clearly not unreasonable and I understand this step.”
“We are fighting inflation and hurting the economy, but at least the exporters, especially the competition that exists today, should be helped. That is why we are working with the Bank of Israel to restore the policy of buying dollars in a certain way so that the dollar that fell today will go up a little and allow the exporters to breathe. We are in turbulent waves and therefore It is very difficult to come and quantify it at the moment. The fall in currency rates only happened in the last few weeks. When there is damage to exports and at the same time because of the interest rate and inflation, we are consciously causing damage to the local economy so that mitigating this can be a pincer movement that will be too difficult,” he added.
At the end, Tor said that the lower classes and those earning the minimum wage should be helped. “I’m sorry that the Israeli Knesset failed the package deal that would have raised the minimum wage by four percent, which closes the gap to inflation, the Knesset failed to pass this law. I call on everyone today to try to raise the minimum wage. A general wage increase in the economy is problematic, we can to get into a big tizzy. The recipients of the allowances as well, these are people who are left far behind even more than the working people, and they need to be helped first and foremost,” he concluded.
Assisted in the preparation of the article: Shani Romano 103fm