After the Monetary Committee at the Bank of Israel left the interest rate unchanged at 4.5 % for the twelfth time in a row, the ruler, Mr. Amir Yaron, criticized the Central Bureau of Statistics, a new way to calculate inflation and express cautious concern that the government will again need to raise taxes.
The number that may affect the interest rate decision is the level of inflation, which is currently 3.1 %, slightly higher than the upper limit of 3 % for the annual goal of the Central Bank. Inflation was recently volatile, due to air air, which although a very small component of the Consumer price index (CPI) had strengthened inflation. This, although it is a temporary rise, which is expected to decrease in the future.
Yaron complains “the transformation of the Central Statistics Office into a different way, where there is more seasonal in the consumer price index. The shift to the new method leads to more prediction errors, at least in the beginning.” Meanwhile, he added that the influence is still ongoing, because “the data was also very influenced by geopolitical events and foreign airlines that stopped coming here.” However, it also affects the prices of the entire audience, which is reflected in the costs of consumption in retail chains. “We do not look at one character. We did not notice when inflation rose to 3.6 %, and even when it is now 3.1 %, we will not be satisfied.”
Is this the right approach in your opinion in the case of rents, which constitute about a quarter of the consumer price index?
Yaron responded negatively. “In renewable contracts, we see a specific stability, while in new contracts, we have seen an increase of 5.2 % during the past year.” According to him, the problem lies in this, “Over time, this is also rolled to the entire housing index, and in the consumer price index is also part of” inflation “, which is also a less affected by the exchange rate (Shekel has been strengthened anywhere enhanced, and it is definitely in the field They likely want to rent in this field. “
Will it be necessary to raise taxes again in the next budget, due to the great defense needs after the war?
Yaron caution and notice, “First of all, we need to understand our place in the defense budget. There are very big differences between the needs of the Ministry of Defense and what the Ministry of Finance is talking about.” He sees the differences in the budget between them, “at the present time, from our point of view in terms of security risks and what is appropriate for security in this sense.”
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It can be said that the defense needs have increased or decreased, or can spread differently over time, which allows degrees of freedom to manage the budget. But assuming that there are still differences, the government will have to find sources. First of all, priorities must be changed on things that do not support growth. He said that the plan is “giving up unexpected things, such as unnecessary offices and negative incentives to go to work.”
As for the promotions of the builders of buyers from the new apartments, in the efforts made to make the public return and buy the apartments, Yaron says that the builders do not work with the Bank of Israel and do not wander in its restrictions. “In deals 20-80 or 10-90, you do not necessarily have to go and sign a mortgage, and certainly today when there is a specific prolongation at that time to complete the construction. Although it is not clear that this is the right thing for this person or family (for the mortgage (from the consumer perspective (from the consumer perspective (from the perspective of MERTAIN). Mortgage, so it is certainly not the same, and there was an improvement here.
However, did the builders be able to overcome you?
Yaron replies with a smile: “Will their creativity bring more deals? Of course, we will have to examine them and see that they do not create excess risks.”
Banks continue to earn huge sums these days. The first quarter of 2025 was particularly strong, with a common profit of about 8 billion NIS. Will the banks be allowed to distribute profits by 50 %? The shares of banks recently increased after this possibility.
Yaron: “Throughout the war, we were also careful in this field. We haven’t made a decision yet, but we will think about the issue of profits before the quarterly reports.”
It was published by Globes, Israel Business News – En.globles.co.il – on July 8, 2025.
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