Last update - 00:00 25/03/2008
Finance Minister: We must prepare for possible economic slowdown
By Natan Sheva, Haaretz Correspondent and Haaretz Service
Finance Minister Roni Bar-On on Tuesday said that the developments in the financial market must be watched closely, and that the public must prepare itself for the possibility of a cooling of economic growth.
Speaking at a conference in Caesarea, Bar-On said "We are following [the market], even if we don't supply new headlines every day and even if we refuse to engage in the demon dance of forecasts, criticism and public estimates regarding our national financial situation."
Bar-On also addressed reports that his relationship with Bank of Israel Governor Stanley Fischer has been shaky lately, saying "despite the headlines, my relationship with the governor is excellent."
"We discuss the complex political dilemmas that face us in proper forums and not through the media. The Bank of Israel and the treasury are responsible for different aspects of the financial policies; two statutorily independent bodies. However, there is a system of advisement and discussion that doubles the strength of Israel's financial policy," he added.
Meanwhile, the Tel Aviv Stock Exchange closed sharply upward on Tuesday building on an interest rate drop and gains from international trading over the past few days.
Futures rose by 1.1 percent, while the Tel Aviv 100 index saw a 1.6 percent increase. Real estate gained five percent and TelTech rose four percent, however the dollar weakened by 0.3 percent, selling for NIS 3.510.
Bank of Israel Governor Stanley Fischer reduced interest rates by 0.5 percent, reaching a total reduction of 1 percent in two consecutive cuts. Interest rates have averaged 3.25 percent since the beginning of the month, the lowest in Israel's history.
The initial estimates were that the governor would reduce the interest rate by 0.25 percent, but Fischer managed to surprise the financial markets once again. The lower interest rate will likely continue to prop up the dollar, which has rebounded and become attractive again over recent days, and the difference in interest rates between the shekel and the dollar will go down to 1 percent.
Related articles: