Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich on Monday agreed to extend the tenure of Bank of Israel Governor Amir Yaron for a second term following months of speculation.
The decision to keep Yaron on after his term ends on Dec. 23 is expected to be brought to the cabinet for government approval at its next session meeting, Netanyahu and Smotrich said in a joint statement.
The move comes after considerable speculation about whether or not Netanyahu would recommend that Yaron, who has been critical of some of the government’s actions, will stay as governor for another full five-year term.
Following the announcement, Yaron accepted the offer and thanked Netanyahu and Smotrich for the expression of confidence.
“We have many important tasks ahead of us in the economic sector and I will do everything in my power so that we meet them successfully and professionally for the benefit of the economy and the country,” Yaron said.
Leading economists, including former senior Bank of Israel and Finance Ministry officials, as well as financial market participants, who consider Yaron as a stabilizing figure, have in recent weeks been pressing the government to extend his term — even more so in view of the challenging war period.
With the outbreak of the fighting triggered by Hamas’s October 7 terror onslaught that killed some 1,200 people in Israel’s largest-ever mass casualty event, Yaron reassured investors last month that he would stay in office until at least the end of the emergency period to help cope with the challenges to the wartime economy.
In the first week of the war, the Bank of Israel, led by Yaron, announced a plan to sell up to $30 billion in forex to help mitigate sharp moves in the foreign exchange rate. With this plan, the central bank was able to intervene in the market and sell as much as $8.2 billion in foreign currency in October to stem steep shekel depreciation.
Since the start of the month, the local currency recouped all of the heavy losses it suffered in October and then some, and is trading around NIS 3.72 against the US dollar. The shekel-dollar exchange rate stood at NIS 3.86 before October 7.
Ron Tomer, president of the Israel Manufacturers Association, welcomed the decision to extend Yaron’s term.
“The governor steered the economy well in his first term,” Tomer said in a statement. “We are happy that he will stay as the responsible adult at the economic wheel of the Bank of Israel in the coming years as well, which will contribute to stability and certainty and continue the fruitful cooperation with the private sector.”
Even before the outbreak of the war, there was uncertainty over whether Yaron would request another term and if lawmakers would want to keep him in the job.
Yaron, who took up the post as governor in 2018, has been critical of the government’s proposed judicial overhaul earlier this year. More recently, the Bank of Israel criticized the government’s war budget plan and spending allocations to tackle the costs of the ongoing fighting with the Hamas terror group.