Netanyahu Government Reappoints Bank of Israel Deputy Governor After Delay
Israeli Prime Minister Benjamin Netanyahu’s government has renewed the appointment of Bank of Israel Deputy Governor Andrew Abir for a second five-year term, Bloomberg reports.
The decision, approved at the request of Governor Amir Yaron, comes after weeks of delay that had raised questions about the ruling coalition’s respect for the institution’s independence.
The central bank confirmed the reappointment on Wednesday, stating that the decision was made after multiple requests from Governor Yaron. The unexplained delay had fueled speculation, with Abir reportedly considering stepping down and Yaron suggesting that Netanyahu’s actions were undermining the central bank’s autonomy.
Abir’s reappointment is seen as a crucial step in maintaining stability at the Bank of Israel, especially given his pivotal role in navigating the country’s monetary policy during the ongoing conflict with Hamas and Hezbollah following the October 7, 2023 attacks. Abir and Yaron adopted a cautious approach during the war, refraining from aggressive rate cuts, with only one exception in January 2024.
The monetary committee has cited inflationary risks stemming from supply-side disruptions and concerns over government fiscal policy as reasons for maintaining a conservative stance. Israel’s base rate currently stands at 4.5%, and Governor Yaron has indicated that a rate cut is unlikely before the second half of the year. The next rate decision is scheduled for April 7.
Prior to the recent conflict, Abir, who previously led the central bank’s markets division for a decade, played a key role in policy-making during the COVID-19 pandemic and the social unrest that followed the government’s attempts to implement a controversial judicial overhaul.
The Bank of Israel has been a strong critic of the judicial overhaul, warning of its potential negative economic consequences, including the depreciation of the shekel and a loss of trust among rating agencies and investors. While the overhaul was largely put on hold following the outbreak of the war in Gaza, it has recently resurfaced as Netanyahu reportedly seeks to dismiss Israel’s attorney general.
The central bank has also voiced concerns about the government’s fiscal policies, though it supported a package of adjustments totaling approximately 40 billion shekels ($10.9 billion) aimed at reducing the target deficit this year and stabilizing Israel’s debt to GDP ratio, which rose to around 70% in 2024.
