Within all the components of economic information, the decision to lower the interest rate by a quarter of a percentage point to 4.5 percent is the most significant. The totality of the country is influenced by stronger factors than net economic data. Bank of Israel Governor Prof. Amir Yaron, who is an asset to Israel's economy, showed responsibility and understanding for the socioeconomic situation as a result of the war in Gaza and the north.
Bank of Israel Governor Prof. Amir Yaron, Photo: Oren Ben Hakon
In contrast, the justices of the High Court of Justice have proven that they continue to live in a disconnected bubble. They see the government as a stumbling block, and they have decided to give renewed impetus to the intifada of the left and the elites. The High Court ruling, which has nothing to do with the economy, could have an indirect effect because it could signal internal instability in addition to the state of war.
Shelves in the supermarket (archive), photo: Herzi Shapira
Bank of Israel Governor Prof. Amir Yaron at the Finance Committee (Archive) // Knesset Channel
Lowering the interest rate is supposed to encourage economic activity and increase growth. But for that to happen, most of the reserve forces need to be discharged and return to their jobs in the economy. Commentators have scratched every figure in recent days to try to justify keeping the interest rate as it was. Here, even the Houthis have emerged as allies of the black seers, since an improvement in the state of the economy does not coincide with the additions of Strzok, Finance Minister Smotrich, and in general everything related to Netanyahu's government. The Houthis, and inflation that has yet to fall below 3 per cent, has raised hopes among black seers that price increases will be across the front.
Positive trend
Here, one import company increased the price of various consumer products, including toothpaste, cleaning products and sauces, by about 10%. The price of fuel has gone up. The lowering of the interest rate shows that there is a preference for home buyers, for example, over the continuation of the all-out struggle against rising prices. Moreover, interest rates as high as they were contributed greatly to inflation. Too high an interest rate slows down economic activity, thinking that price increases will be halted, but entrepreneurs weigh it in their investments and expenses, resulting in a push for inflation.
4.5% is still too high, but it signals a trend. The economy must not be sacrificed on the altar of total war mobilization. From a long-term perspective, Israel's victory over its enemies depends to a large extent on a strong, advanced and growing economy. Two very important points in economic policy are the deficit that the government will be willing to absorb in the budget, and the problem of Palestinian workers from Judea and Samaria entering the Green Line to work. In the wake of a war like Israel's, it would be better to accept a significant increase in the deficit in order to support all population groups affected by the war.
The price of fuel has gone up, photo: Joshua Yosef
On the other hand, do not give in to the easy temptation of raising taxes (in order to reduce the deficit). In other words, despite the trend towards a free, conservative and fiscally tightened economy, the right-wing government will increasingly turn towards a social democratic welfare economy.
Bring back the workers
As far as Palestinian workers are concerned, it makes sense to gradually return to routine work in the places where they made a living. Migrant workers from Sri Lanka are not the dream of generations, while the Arabs need to receive a message from Israeli society: we still coexist, the dialogue between the societies exists against its will, and the terrible punishment for Gaza does not concern Israel's relations with the various sectors of Arab society, including residents of the Occupied Territories.
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Some reservists need to return to workCredit: AP
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