Netanyahu in new directive to Likud MKs: "Enough to speak out about the governor""

February 22, 2023   

Prime Minister Netanyahu made it clear this morning (Wednesday), once again, that the independence of the Bank of Israel will not be harmed. Netanyahu today ordered Likud MKs to stop interfering and expressing opinions about the governor. "We are committed to maintaining the independence of the Bank of Israel." A statement from his office said: "The independence of the Bank of Israel is a central pillar of the economic policy that the Prime Minister has been leading for two decades, and nothing will change this." The Prime Minister's statements come against the backdrop of the decline in the shekel, which continues this morning against the dollar, which is already at 3.67 shekels. The shekel also weakened against the euro, which is trading at 3.90. This is in addition to the strengthening of more than 2% recorded yesterday. In the last three weeks, the shekel has weakened to nearly 9%. The sharp devaluation of the shekel in the last two days is pushing economists to update inflation forecasts, as they estimate that they will rise upwards. This means: more interest rate hikes are on the agenda even before the scheduled date - April 3. Jonathan Katz, the chief economist at Leader Capital Markets, estimates that, following the sharp devaluation, an interest rate increase of 0.75% to 5% is possible in the upcoming interest rate decision in early April, if the interest rate is not raised first. Yesterday, Netanyahu wrote: "The Bank of Israel law was passed under my leadership and it guarantees the independence of the Monetary Committee headed by the Governor in setting the interest rate. Nothing will change this." He made sure to tweet this in Hebrew and English on his Twitter account - as a message of reassurance to the world. Netanyahu's words came in response to Foreign Minister Eli Cohen - who called for "formulating an outline with the Governor of the Bank of Israel to stop interest rate increases." This morning, Cohen published a clarification and wrote: "As someone who worked for an international rating company, managed large companies, was an accountant, and lectured on finance in the past, I support the independence of the Bank of Israel. Any other interpretation, even if nothing else is said, is distorted. I propose focusing on tools to help young couples and mortgage borrowers.".