Bank of Israel Governor Amir Yaron delivered his opinion on the state budget on Tuesday. The Governor said that in his opinion, "the labor market has no real news in the current budget, and maybe even vice versa."
At first, Yaron said that in his opinion, the budget framework is responsible and corresponds with the monetary targets. However, he later expressed criticism, saying that "when looking at the budget, it lacks significant components." The two missing components, he claims, are human capital and physical capital. The Governor also said that there is a "significant gap in the budget in light of demographic growth in Israel."
The Governor also referred to the interest rate increase, and asked the banks to "pass on the interest rate increase to the consumer public." The Governor referred to the interest rate and said that it is "a painful and necessary tool to eradicate inflation," adding that the various officials at the Bank of Israel are "examining the pain and examining how to eradicate it."
Yaron defended the decision to raise the interest rate, saying that if the Bank of Israel had not responded, the increase in the monthly repayment, even if it had not been felt at first, would have eventually risen exponentially. "The damage was much greater," he explained. Finally, the Governor asked the banks to pass on the interest rate increase to the consumer public. "The creative solutions presented by the banks show how much they can help consumers who need it. They are expected to continue."
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