JERUSALEM - The head of Israel's parliamentary finance committee on Monday called on Bank of Israel Governor Amir Yaron to lower short-term interest rates as one measure to help ease the burden on citizens impacted by the Israel-Hamas war.
Gafni has been a constant critic of the central bank for raising its benchmark interest rate sharply - to 4.75% from 0.1% in April 2022 - to battle inflation that had peaked this year above a 5% rate. He also believed the Bank of Israel did not push banks enough to pass on rate hikes to customers' savings and checking accounts as quickly as to mortgages and other loans.
The next rates decision is due on Oct. 23 and financial markets have begun to price in a rate cut given a view that the war will moderate inflation further. The plan for banks would ease the burden of credit and fees for households and businesses who live and operate within a 30 km range of the Gaza Strip, citizens who were evacuated from their homes by an official state agency, those who were recruited into the reserves, or who are immediate relatives of those killed in the war or kidnapped by Hamas.