Interest rate remains unchanged in Flug’s last committee meeting

Flug's successor still unknown, but decision was not impacted by uncertainty, she said.

Karnit Flug  (photo credit: MARC ISRAEL SELLEM)
Karnit Flug
(photo credit: MARC ISRAEL SELLEM)
The Bank of Israel Monetary Committee decided on Monday to keep its interest rate for November frozen at an all-time low of 0.1%.
Despite speculation that the committee would hike interest rates in Bank of Israel Governor Dr. Karnit Flug’s final committee meeting prior to leaving office, it eventually decided that economic “conditions are still not fully in place” to withdraw from its current accommodative policy.
According to a statement by Flug, the committee concluded that the country’s inflation environment “is still not yet sufficiently entrenched” to consider raising the interest rate, which has stood at 0.1% since March 2015. The bank’s research department has forecast that GDP will grow by 3.7% in 2018 and 2.6% in 2019.

In July,
Flug informed Prime Minister Benjamin Netanyahu that she would not be standing as a candidate for an additional term in office. She will therefore conclude her five-year term as governor on November 12, although no successor has yet been named.
Netanyahu and Finance Minister Moshe Kahlon have interviewed Prof. Amir Yaron, Prof. Ben-Zion Zilberfarb, Prof. Efraim Sadka and former governor of the Central Bank of Argentina Prof. Mario Blejer in recent months as the search for Flug’s successor continues.
“It is important to me to emphasize that the uncertainty regarding the identity of the next governor will not impact on the decision-making processes,” Flug said        .
“To the extent necessary, the deputy governor [Dr. Nadine Baudot-Trajtenberg] will serve in my stead, and in particular will chair the upcoming interest rate discussions, as required and pursuant to the law.”