UTJ MK: ‘The government is not in our hands,’ Bank of Israel chief should quit

United Torah Judaism lawmaker Yisrael Eichler on Monday said Bank of Israel Governor Amir Yaron should quit over repeated interest rate hikes that have not quelled inflation, and also claimed that government power was in the hands of unelected bureaucrats.

In an interview with the Haredi news site Kikar HaShabbat, Eichler, who is head of the Knesset Labor and Social Welfare Committee, said Yaron should “stand trial by the public” for his failures to halt soaring prices. The Bank of Israel on Monday is expected to raise interest rates for the tenth time in a row to 4.75 percent.

Eichler acknowledged the independence of the central bank governor but said he needs to be held accountable for his perceived failures.

“I know the results. He raised the interest rates but it didn’t stop the inflation. In my opinion, he needs to quit,” Eichler said.

This is not the first time that government officials have attacked Yaron and attempted to pressure him over monetary policy. Yaron has repeatedly warned that the government’s judicial overhaul plans will harm the economy.

Pressured by the interviewer over the government’s responsibility and lack of action against the cost of living, Eichler claimed that elected officials lacked power and that the country was governed by bureaucratic clerks.

“For a long time the government has not been in our hands, it’s in the hands of [ministry] officials, who get paid for not working. The government is in the hands of the deep street,” he said, in an apparent mispronunciation of deep state.

“The government is in the hands of the biggest economic forces in the market, who are raising the prices,” he said.

He then compared decision-making in Israel to Russia, claiming “here there are many Putins” who decide the fate of the economy, referencing Russia’s authoritarian President Vladimir Putin.

Bank of Israel Governor Amir Yaron arrives at a cabinet meeting on the state budget at the Prime Minister’s Office in Jerusalem, February 23, 2023. (Alex Kolomoisky/POOL)

Like much of the world, Israelis have been battling high interest rates and a spiking cost of living over the past year.

The Bank of Israel has steadily raised its benchmark interest rate from a record low of 0.1% in April 2022 in a bid to rein in inflation, which has been hovering above 5% in annual terms for the past six months, falling short of the government’s target range of 1% to 3%.

The consumer price index (CPI), a measure of inflation that tracks the average cost of household goods, rose by 0.8% in April, above analysts’ expectations of 0.4% to 0.5%, which brings annual inflation over the past 12 months to 5%. The April CPI monthly reading is the highest since July 2022.

Yaron has taken flak from coalition members for the repeated rate hikes and his criticism of the coalition’s plans to shackle the judiciary. Foreign Minister Eli Cohen and MK David Bitan, both members of his Likud party, slammed the bank in February, with Cohen going as far as urging government intervention.

In April, Communications Minister Shlomo Karhi said the Bank of Israel chief should be replaced with a robot, in what appeared to be an attempt to criticize the bank’s raising of rates instead of pausing to see how the hikes affect inflation.

Meanwhile, the government has faced widespread criticism that it is not dealing with the cost of living crisis, instead focusing on its controversial judicial overhaul plans.

Sharon Wrobel contributed to this report.