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(photo credit: Ariel Jerozolimski)
Bank of Israel Governor Stanley Fischer has received an "A" in the annual Central Banker Report Cards listing published by Global Finance magazine, besting big-guns such as the US' Ben Bernanke and the EU's Jean-Claude Trichet.
Among other things, the report praised Fischer's handling of inflation.
"Fischer has been central bank governor for the past two years, and in that time he has had to combat the effects of war on the Israeli economy," the report said. "Last year he did that by raising the benchmark lending rate to counter the inflationary effects of a lower shekel. This year, despite government instability, the central bank has maintained a focus on keeping inflation within the 1 percent to 3% target band. With the consumer price index (CPI) rising by 1.1% in July and forecasts predicting inflation for 2007 will reach 3%, Fischer responded swiftly in August with a 25 basis-point increase in the interest rate to 4%, effective from September."
Fischer also scored well for pushing forward what the report called his "reformist agenda."
"He seems to be getting his way on the passing of a new Bank of Israel law that will enshrine the concept of price stability as the central bank's major goal and help establish a monetary policy committee including not only internal but external advisers," the report stated.
The report noted that 2007 has been marked by the ability of the world's central bankers to act with "remarkable unity" in the face of the subprime crisis that unfolded over the summer, citing the move on the part of the central banks of Europe, the US, the UK and Japan to delay rate increases until the turmoil in world markets passed.
"They were perceived by markets around the world to be riding to the rescue of a financial system in distress, but the leading central bankers were also taking a collective risk, betting that the inflationary effects of their accommodative monetary policy would be offset by the pressure that the recent turmoil had brought to bear on their economies," the report said.
Bernanke's performance in the face of the market turmoil as head of the US Federal Reserve earned him a "C" rating from the magazine.
"In this summer's subprime mortgage meltdown, Bernanke faced his first real challenge as US central banker. Unfortunately, his response was somewhat feeble. As America's financial system seemed to teeter on the brink of disaster, Bernanke vanished from view," noted the report.
All his actions accomplished, the magazine said "was assure jumpy investors that there must be something very, very wrong that they didn't yet know about. It was a disappointing performance from a central banker who had hitherto shown himself to be a more-than-worthy successor to Alan Greenspan."
Trichet, the EU's central bank chief, landed a "C+" on his report card, with the magazine concluding that "it will be a while before he appears to be in control again" given the central bank's nonchalance towards recent market risks.
Both, however, faired better than Mervyn King, the UK's "now-beleaguered" central banker who scored a "D." In the midst of the credit upheaval, King announced that the Bank of England would not come to the rescue of troubled banks, a decision he was forced to reverse when the central bank bailed out Northern Rock, an embarrassment that "paled by comparison, though, to the humiliation King had to endure when he appeared to cave in to political pressure to ease borrowing requirements for troubled banks in the UK," said the report.