The Bank of Israel decided earlier to raise the interest rate by 0.5% to 3.25%. Dr. Sigal Rivon, director of the monetary division in the research division of the Bank of Israel, spoke with Anat Davidov this evening (Monday) on her program on 103FM, and commented on the matter.
The highest in a decade: the Bank of Israel raised the interest rate by 0.5% to 3.25%
“I think this means that the Bank of Israel considered all the considerations and decided that this is the proper and appropriate change at the stage we are in. On the one hand, inflation that is beyond the target and that we still need to work to lower it. On the other hand, the sixth time that the interest rate is raised – we are already closer to what it is A level that will probably be the level at which we stop, therefore this step was right.”
She replied that further increases are expected: “I think that both in the committee’s announcement and in general, it is possible that the level we will reach will be a little higher than three and a half.” However, she ruled out the possibility of a recession in the near future: “First of all, regarding the state of activity, then it is true, we see perhaps some kind of slowdown in the rate of growth, but I certainly would not use the word recession. Still the level of output, the level of activity is higher than it was according to some A trend that we would have expected before the corona virus, since the economy is really in a good state.”
“Once again, recession is a very strong word, slowing down the pressure on prices and even so, in a footnote, I will emphasize that these products we mentioned are mostly imported products, so the significant impact will be less impact from imports,” she added.
In conclusion, she referred to the expected change in the position of the Minister of Finance: “Of course we will work and advise to the best of our professional knowledge for each Minister of Finance, for each government. The decisions of the government are of course the decisions of a government formed according to its own tastes and worldviews, we will advise in the context of responsibility, in the context of Expenses that will support sustainable growth.”
“We will refer specifically to everything when it seems that there is a budget proposal, as we always say, ‘What really matters is the long-term view’ – the investment in infrastructure. Physical infrastructure as well, educational infrastructure as well, which are also no less important and perhaps more so,” she added.
Assisted in the preparation of the article: Noya Hasson 103FM.