Bank of Israel Governor Prof. Amir Yaron has ridiculed Knesset Finance Committee chairman MK Moshe Gafni's (United Torah Judaism) call to promote a bill that would separate interest rate hikes from the interest rate on mortgages. Speaking to the Knesset Finance Committee, Gafni said, "I am asking the committee's legal advisor to initiate a bill by the committee, so that when the interest rate in the economy rises, the interest rate on the mortgages will not rise. To examine this legally, especially regarding the middle class and weak strata, who purchase their first apartment."
In response Prof. Yaron told the Supervisor of Banks Conference today, "The Bank of Israel is determined to return inflation to the target range. We always work with a comprehensive view of all the data and their impact on the economy, businesses, and households. The interest rate is a broad tool and the main tool to lower inflation, and it will continue to be so, as long as necessary, to make sure that inflation returns to its target.
"Price stability is a condition for economic stability. Inflation first of all hurts the weaker strata, so the pain involved in raising interest rates is understandable and taken into account, but it is intended to prevent greater pain in the future - those who do not understand this and try to find miracle solutions, first and foremost are going to hurt precisely the weaker strata," Prof. Yaron stressed.
"Moreover, frequent changes or excessive legislative improvisation, which has no parallel in the Western world, create risks - both for banks and for private and business customers - in undermining the business and legal environment. These changes may ultimately miss the goals of the legislation or regulation. Such uncertainty may harm the entry of new players, the development of advanced products and international perceptions of the Israeli market and the fact that it has an advanced economy founded on a free market."
Published by Globes, Israel business news - en.globes.co.il - on November 29, 2022.
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