以色列央行行长：下次会议将“活跃”，年内已四次降息

Central bank governors and finance leaders will convene for the Jackson Hole Economic Symposium next week. Among them attending is Amir Yaron, governor of the Bank of Israel. He's stopping by on his way over to Jackson Hole. Governor, thank you so much for joining us. Thank you for having me, David. This symposium happens at a time when we are just seeing yields across the globe hit generational high levels on the long end of the curve.

I know you're currently engaging in a rate cutting cycle, or at least you have cut rates. But more broadly, just how difficult of a rate environment do you and your peers find themselves in now? Well, we've been on a different cycle than the rest of the world, partly because of the war, and we've kept rates for quite a long time at a high level at around 4.5%. But since November, we've had four cuts and we're now at three and a half, and the last two have been two consecutive ones in May and July.

And our research department has penciled in that, uh, 3% in 12 months from now. But ultimately we've had to manage huge uncertainty. Um, and, uh, you know, our next meeting, which is about two weeks, will be a live one because we are you know, we're going to have to look at, uh, the developments on inflation. Inflation now is a 1.5%, but it's going to go back up towards the center of our target at around 2% in the next few months.

We just had very, um, you know, strong, uh, GDP numbers come in the last quarter. The growth rate was at 15%, although there are some caveats there about certain segments being produced abroad. But generally these are very strong, uh, numbers. So we are going to have to look at labor inflation, geopolitical risks, fiscal risks. And all of these considerations will be brought into the table in the next meeting. And of course, what's going on in the rest of the world also, uh, influences us.

How difficult is that for a smaller economy, which is very open, has a lot of global influences to be engaging on this part of the cycle. When the rest of the world's rest of the developed world, there are questions being asked whether they'll have to continue to raise rates. So first of all, Israel enjoyed, um, kind of the fact that we have LNG. And so the rise in oil prices, to some extent we've been immune from that.

The main issue for us along the way has been a shortage of labor. And we had to explain to the public, even though output is below its pre-war potential, we actually in what's called positive output gap because we just don't have labor and therefore we can reduce interest rate along the way. And because of the uncertainty, as you know, reserve duty have somewhat subsided. Uh, there's a little bit more clarity and inflation due to our monetary policy has brought inflation successfully to be around 2%.

We were able, uh, to do these cuts while in the rest of the world we've seen, you know, obviously inflation has gone up. And so we either see our cycles that are going up or at least not reducing the rates as they were, uh, expecting to do prior to the war. Well, the defense spending, for a very obvious reason in Israel has surged. And Prime Minister Netanyahu also wants to increase that spending as well. The cost of financing, the cost of debt for government, especially as spending increases.

How much of that is on your mind as you calculate policy? It is very important. Let me just, um, first see Disraeli economy. And the Israeli people have shown great resiliency throughout the war. Um, you know, we've seen it in credit card expenditures, VC money coming in, export. It's part of the dynamic and agility of the economy. And in fact, the numbers I just said about GDP have brought GDP to be about just below 1% from its long term pre-war trend.

That in reference to other wars. Um, is is it is a big, uh, accomplishment? The big fiscal challenge, however, ahead, is managing what I called the fiscal trilemma. And any new entry government after the election will have to deal with it. And that is bringing Israel back on a path that is a declining debt, managing the defense expenditure. And obviously they will be derived partly from the map of security needs that will arise.

And third, investing in growth expenditures, growth engines, uh, and managing these three is going to be a difficult with it. There are going to be issues like how do you bring the ultra orthodox community back into the workforce, how do you draft them? These are social and political issue, but we have shown in the bank they have immense economic ramification as well. So you have some idiosyncratic issues that you just laid out that you have to deal with, but other ones that Israel is facing are things the entire world does at the moment.

The impact of higher oil prices, even though Israel might be a little bit more insulated. The impact of AI Israel is certainly a hub for AI innovation. As you go to Jackson Hole, what do you expect to be the dominating big picture issue that you and your peers really need to discuss and maybe have hard conversations about? I think, uh, part of it, eyes in the minds of everyone, is an increasing productivity, as we expect, um, is it going to actually increase prices or actually ultimately we're going to see the gains of productivity lowering inflation.

Which one is going to comment at what phase? That's obviously going to be one issue. And the other ones are and related are financial markets. You mentioned the high yields. Where are they going. Why are they um moving the way they are. Is are they expressing actually growth. Are they expressing inflation? Uh, these are the type of issues that I think will be discussed along the meeting. The markets, global and especially the American markets, are starting to trying to grapple and understand what it means to have a fed chair who doesn't communicate as much.

That doesn't give forward guidance. What does it mean for you and your peers as you try to understand what the fed is doing and how that impacts your policy to have a difference in communication style? I think, um, you know, as uncertainty has moved up, uh, you know, clearly in the last few years forward guidance, um, and a credible forward guidance becomes more difficult. And it's natural that more and more central banks have gone to use the word data dependent and are somewhat less committal about what they do in order to preserve the credibility, partly because, uh, reality is much more uncertainty.

Uh, things moved in a very fast, uh, notion. We've seen days where oil, according to news, have dropped to into the 70s. And then a few hours later. Uh, developments, uh, you know, take a U-turn and they change. So it's all understandable that one wants to be, uh, to maintain, uh, first of all, credibility. Generally, with forward guidance, I think each institution will have to kind of keep its particulars of how it does things.

We try to provide, I would say, somewhat of a forward, uh, guidance, but again, maintaining a lot of flexibility in terms of making sure people understand that things are very uncertain. I even use the word um, you know, we expect interest rate to be 3%, uh, maybe in a year from now, but that's not a promise, it's not a bond, etc.. Regarding the U.S., we're obviously trying to figure out where the fed is going. That was always true because it always impacts also the global economy and Israel as well.