Economy

Bank of Israel Governor Faces Opposition Over Interest Rate Hikes

Published

5 months ago

November 28, 2023

Bank of Israel Governor Faces Opposition Over Interest Rate Hikes

Amidst the economic challenges posed by the ongoing conflict with Hamas and the resulting financial strain, a debate has erupted over the leadership of the Bank of Israel. Moshe Gafni, Chair of the Knesset Finance Committee and a member of the United Torah Judaism party, has taken a firm stand against the reappointment of Bank of Israel Governor Amir Yaron for a second term. Gafni criticizes Yaron’s policies, particularly the interest rate hikes that have been in place since mid-2022, which he argues have disproportionately impacted low-income groups.

The central bank’s decision to increase mortgage rates to 4.75% has been a point of contention for Gafni, who represents poorer demographics that are now facing the burden of raised loan rates. He argues that consumer bank interests have not seen similar increases and has expressed dissatisfaction with the central bank’s reluctance to pressure banks into offering relief measures during these difficult times.

In response to Gafni’s assertions, the Bank of Israel has defended its actions by highlighting its international recognition for maintaining economic stability in the face of rampant inflation, the aftermath of the pandemic, and military conflicts. The central bank has emphasized the importance of informed economic discussions and has warned against engaging in toxic discourse while managing crises.

Despite the criticisms, Prime Minister Benjamin Netanyahu has expressed support for Yaron’s continuation in the role, pending cabinet approval. His stance is backed by economists who have praised Yaron’s role as a stabilizing force during challenging times, including the conflicts with Hamas.

The Bank of Israel, which has been managing an inflation rate currently at 3.7%—above the target but showing improvement from previous highs—is not expected to change interest rates in today’s central bank meeting scheduled at 1400 GMT. Nevertheless, there is anticipation that discussions on potential rate reductions might take place in the January session.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

4 months ago

December 26, 2023

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.

The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.

Economy

China identifies second set of projects in $140 billion spending plan

Published

4 months ago

December 25, 2023

China identifies second set of projects in $140 billion spending plan

© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo

SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.

With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.

The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.

China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.

The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.

“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.

The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.

($1 = 7.1315 renminbi)

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

4 months ago

December 25, 2023

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.