Israeli Finance Minister Bezalel Smotrich (Religious Zionist Party) chided members of the Coalition Monday night, rebuffing their attacks on the Bank of Israel’s decision to raise interest rates.
The Bank of Israel announced overnight that it will raise the benchmark rate by half a point, from 3.75% to 4.25%, to the highest level since 2008. In a statement Monday, the Bank cited continuing high levels of inflation in its decision to raise interest rates yet again, after interest rates were brought to an all-time low of 0.1% last April.
“The Israeli economy is recording strong economic activity, accompanied by a tight labor market and an increase in the inflation environment.”
Several Coalition members publicly criticized the rate hike and called on Smotrich to pressure the Bank to reverse the decision.
“I ask my colleague, Finance Minister Bezalel Smotrich, to draw up a plan with the Bank of Israel’s governor to halt the interest rate hikes,” tweeted Foreign Minister Eli Cohen (Likud).
MK David Bitan (Likud), chairman of the Knesset’s Economic Affairs Committee, also demanded the Bank of Israel freeze interest rate hikes, saying that the anti-inflation moves were too costly for Israelis.
In response, Smotrich made a rare social media post in English, likely aimed at reassuring investors abroad and foreign credit rating agencies, rebuffing “populist statements” and vowing that his ministry will not interfere in the Bank of Israel’s decision to clamp down on inflation.
“The independence of Israel’s central bank is fundamental for our strong and innovative economy. As Finance Minister, I stand firmly against populist statements threatening the Bank of Israel’ independence.”
“As a government, we will deliver a budget that invests heavily in infrastructure for economic growth as well as a package of assistance for those truly in need.”