Assessments are growing that the Bank of Israel will cut the March interest rate by 25 basis points to 4%. Governor of the Bank of Israel Prof. Stanley Fischer told Channel 2 News, "I hope that we won't let ego games interfere with the interest rate decision. If there are indications that inflation is easing, we'll cut the interest rate. We'll do what we have to do."
Fischer made the comment ahead of today's Knesset Finance Committee special meeting to discuss the weak dollar. He added, "People will have to wait until the end of the month" for his decision. The interest rate decision for March will be taken on the last Monday in February.
Regarding the proposal of Manufacturers Association president Shraga Brosh and Histadrut chairman Ofer Eini to restrict the powers of the governor of the Bank of Israel to set monetary policy, Fischer said that he "was not worried." He reiterated that the Bank of Israel would not intervene in the foreign currency market in order to stop the slide in the shekel-dollar exchange rate. "This won't go on forever," he said.
Fischer added that the shekel was strong because the Israeli economy was strong. "$50-100 million enters the Israeli economy every day. Nothing can be done to stop the pressure of foreign investors or against the strength of the Israeli economy."
Brosh and Eini today backed off this proposal in their appearance before the Finance Committee.
Published by Globes [online], Israel business news - www.globes-online.com - on February 13, 2008
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