The Bank of Israel raised its benchmark interest rate again on Monday, but the country's foreign minister criticized it. Eli Cohen, Israel's foreign minister, took to Twitter to express his disappointment in the hike and stated his support for a process that would prevent future increases.
Central Bank Responds to Criticism
In response to the foreign minister's criticism, Bank of Israel Governor Amir Yaron suggested that Cohen examine the current data, which showed inflation continuing to rise, and respect the central bank's independence.
Rise in Inflation Prompts Interest Rate Hike
Israel's inflation rate reached a 14-year high of 5.4% in January, which prompted the central bank to raise interest rates by half a percentage point to 4.25% - its eighth hike since last April.
Foreign Minister Calls for Outline to Halt Interest Rate Hikes
Foreign Minister Cohen called on the finance minister to work with Bank of Israel Governor Yaron to formulate an outline to stop future interest rate hikes.
Central Bank Stands by its Independence
Governor Yaron emphasized the importance of the central bank's independence and warned of the consequences of harm to central banks in other countries. Meanwhile, Deputy Bank of Israel Governor Andrew Abir stated that more interest rate increases were likely to combat "sticky" inflation and to bring the inflation rate back to a 1-3% target range.
