Israeli interest rates are not expected to follow its US and UK counterparts, and will remain unchanged.
Stanley Fischer, Governor of the Bank of Israel, announced Sunday in a special press conference held in Tel Aviv, that he will not lower interest rates at this time, fearing it may cause a spike in inflation rates, leading to Israel failing to reach it annual inflation goals of 1%-3%, for the third time in a row.
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Fischer, Yedioth Ahronoth reported Monday, also made it clear that the Bank of Israel will not interfere in the foreign currency trade in order to boost dollar rates. The State, he said, should not interfere in the market simply to stop a currency slump.
The Bank of Israel has been under severe pressure to lower interest rates. Fischer impromptu press conference came to explain his refusal to the public: "We can't fiddle with inflation stability. The bank (of Israel) must protect the Israeli economy
from the recession noted in world markets," he said.
Fischer went on to criticize the interest policy of his predecessor Dr. David Klein, who drastically lowered interest rates in 2001 by 2%. The move, he explained, resulted in a subsequent 4% increase in interest rates. "It's okay to make one mistake," said the governor sardonically, "but there is no reason to repeat it."
The governor also revealed that the Bank of Israel and the Finance Ministry are in the process of developing the "Bank of Israel Law", which will serve, according to the governor, "as a platform for advancing the Israeli market."
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