Governor Stanley Fischer of the Bank of Israel head said Thursday that the worst of the worldwide financial crisis is past, but despite the improvements seen in the past quarter, the real effects of the financial crisis may worsen in the immediate future. Speaking at the Caesarea conference in Eilat, Professor Fischer warned that unemployment may rise in the upcoming months, while negative growth is expected to continue.

Fischer said that the increase in value-added tax (VAT) that went into effect on Wednesday is expected to lead to inflation in the months of July and August. He said that the Bank of Israel will determine interest levels with a goal of 1-3 percent inflation over the course of the year. The governor explained, "We are weighing the threat of inflation against two of our goals: maintaining stable prices and supporting business and growth.” He estimated that the general public in Israel and around the world would begin to feel the effects of the economic turnaround by early 2010.

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