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Last week the Governor dropped by the State Control Committee, trying to derail its intention of writing a damning report on the Bank of Israel's failure to keep prices stable. "It isn't necessary or wise to overuse interest tools to depress inflation. It would just hurt growth and exports," the Bank of Israel leader told them, letting the cat out of the bag.

All this time Fischer has been running a double policy, maneuvering between two goals: price stability and stimulating growth and exports. He says his main target is inflation, and only when that is tamed can he lower interest rates to stimulate growth. But his actions meow louder than words. He evidently thinks he can achieve both stable prices and growth. But he's wrong. His only tool is interest rates, and all he can do is control inflation. He can't rule economic activity or growth. Meanwhile, his dual goals have led to policy zigzags, which is why central bank interest was 4.25% six months ago, then cut it to 3.25%, now it's back at 3.75%. Fischer should have moved hard, raising the rate for June by 0.5%, not 0.25%. He's leaving us with negative real interest rates and now it's clear that his 0.25% hike won't do the job. Expectations are for prices to rise further and now more rate hikes will be needed. He has to focus on taming inflation, no more.