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Bank of Israel denies that governor will not seek new term

September 4, 2023 at 8:52 am

This picture taken on August 23, 2022 shows a view of the exterior of the headquarters of the Bank of Israel, the country’s central bank, in Kiryat Ben-Gurion in Jerusalem [AHMAD GHARABLI/AFP via Getty Images]

The Bank of Israel has denied claims that Governor Amir Yaron will announce today that he will not seek a second term in office, Reuters has reported. The bank reiterated that he will make his decision around September-October time.

Earlier, Army Radio — one of two main radio channels in Israel — reported that Yaron would make public his decision “on Monday” not to seek another term. His current five-year appointment expires at the end of the year.

“The report this morning by Army Radio that the governor will deliver his decision today regarding the extension of his term is incorrect,” said the bank. “As he has said until now, the governor will deliver his decision on extending his term around the [Jewish] holiday season.”

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A spokesperson for the central bank did not respond when asked what Yaron’s decision was.

The issue of whether he would seek or be reappointed to a second term has been looming over financial markets for months. Yaron has said he would make his decision around the Jewish high holy days, a three-week period which runs from 16 September through to 7 October.

The bank governor has not tipped his hand either way but he has been critical of the economic impact of a plan by Prime Minister Benjamin Netanyahu’s government to overhaul Israel’s judicial system. Yaron has also clashed with lawmakers over sharp interest rate increases since April 2022 that have boosted bank profits while hurting mortgage holders.

Army Radio also reported, without citing sources, that Netanyahu would choose economist Leo Leiderman to replace Yaron. Netanyahu’s office declined to comment.

Leiderman was chosen by Netanyahu to replace outgoing governor Stanley Fischer in 2013 but he withdrew his candidacy. He told Reuters that he has not been approached for the central bank governor’s role and wants to stay in his positions as economist at Bank Hapoalim and Tel Aviv University. “I strongly recommend the government to nominate Professor Amir Yaron for a second term as governor of the Bank of Israel,” he said.

Israeli-born Yaron was a professor at the Wharton School of the University of Pennsylvania when he was chosen by Netanyahu in 2018 to head Israel’s central bank, citing the need for an expert on the global economy. He succeeded Karnit Flug, who opted not to seek a second term.

Yaron and the monetary policy committee are expected later today to decide on interest rates. A Reuters poll showed that 15 of 16 economists expect the benchmark rate to stay at 4.75 per cent for a second straight meeting in the wake of the inflation rate easing to 3.3 per cent in July.

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