Israel’s central bank chief sees more rate hikes, critical of judicial reforms

Bank of Israel Governor Amir Yaron said interest rate hikes will likely continue since inflation remains too high, while urging the government to maintain the independence of the country’s judicial system.

In an interview with CNN, Yaron said that in Israel and globally, “we are seeing stickiness of inflation,” particularly in services.

“So we are determined absolutely determined to bring inflation back down to its target,” Yaron said, referring to the government’ 1-3 percent annual target. “And if that means continuing raising rates, and that is our primary tool, that’s what we will do.”

Israel’s inflation rate reached a 2008 high of 5.4 percent in January. February data are slated for release later on Wednesday and economists polled by Reuters estimate a 5.0 percent rate.

In a bid to contain inflation, the Bank of Israel has raised its benchmark interest rate to 4.25 percent from 0.1 percent over the past year.

Yaron also criticized the Israeli government’s proposals to overhaul the judiciary, saying the plan as of now could weaken the courts’ independence. “The process itself is hasty and does not have a wide agreement in the public,” he said.