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As the governor of the Bank of Israel bows out of his job today after a five-year stint, he can look back at 2004 as the only year in which he managed to achieve an inflation rate within the government's target range.

The consumer price index for December increased by 0.1 percent, thus bringing the inflation rate for the entire year to 1.2 percent. The government's target range for inflation for 2004 was that of "price stability", namely 1-3 percent.

In each of Klein's previous years in the post, the governor managed to underscore or overreach the target. Nevertheless, Klein leaves the central bank with a record of conquering inflation, bringing Israel's consumer price index firmly under control, and maintaining financial and monetary integrity during the last few years during which the economy has suffered a deep recession.

Klein began his fight against inflation while serving on the bank's management under his predecessor, Jacob Frenkel, in 1992. In that year, in Frenkel's first year of office, Israel had an inflation rate of 9.4 percent. By 1994, this had grown to 14.5 percent. Under Klein's steadfast control, however, inflation is now decidedly low, at 1.2 percent; and except for a freak year of 2002, when the CPI increased by 6.5 percent, the inflation rate in each year of Klein's governorship was almost zero.

In fact, in 2000, it was zero; in 2001 - 1.4 percent; in 2002 - 6.5 percent; in 2003 - a negative 1.9 percent; and in 2004 - 1.2 percent.

On Friday, the newly chosen (yet-to-be-confirmed) eighth governor of the Bank of Israel, renowned American economist Stanley Fischer, arrived in Israel and was welcomed by senior staffers of the central bank and Finance Ministry director general Joseph Bachar, who, together with his counterpart at the Prime Minister's Office, formed the headhunting committee to find Klein's successor.

To the waiting press, Fischer said (in Hebrew), "I am happy to arrive to start a long process. It is a great honor for me, and I hope that I will be able to help the state."

The government will appoint deputy central bank governor Meir Sokoler as an interim governor until the full bureaucratic process has been completed and Fischer can take up his new post, in some three months' time. Sokoler, who was chosen above the other deputy at the bank, Avie Spivak, will take up his post at midnight tonight, precisely as Klein takes his leave.

Fischer is scheduled to start the process of his immigration today, meeting with the Interior Ministry, and also meeting the committee that vets senior public sector appointments. He is also expected to meet Netanyahu, Bachar, Klein and other senior staffers at the Bank of Israel, including the head of the workers committee, Rafi Lankry.

Tomorrow, Fischer will meet President Moshe Katsav and Prime Minister Ariel Sharon, and is expected to then fly immediately back to the United States.

CPI on target

In the CPI figures released on the weekend by the Central Bureau of Statistics, the December index rose by 0.1 percent, pushed primarily by a 30-percent leap in prices of fresh vegetables. The December CPI change in the past four years has been negative.

In December, rising prices were seen in clothing and footwear (up 4.6 percent) house maintenance (0.5 percent) and food (0.3 percent), while housing costs fell by 1.7 percent, telecoms by 0.8 percent and culture and entertainment by 0.7 percent.