Finance Professor Amir Yaron has been chosen as the next governor of the Bank of Israel, local media reported Tuesday.
Yaron, 54, is a finance professor at the Wharton School of the University of Pennsylvania, where his work focuses on asset pricing, macro-finance and applied time series econometrics, according to his online curriculum vitae.
Yaron got his doctorate in economics at the University of Chicago, where he also earned his second master's in economics. He has a master's degree in economics from Tel Aviv University, where he also earned his bachelor's degree in economics and sociology.
Prime Minister Benjamin Netanyahu and Finance Minister Moshe Kahlon were due to formally announce the nomination on Tuesday afternoon, ahead of presenting it to the Public Service Nominations Committee for confirmation.
Meanwhile, the Bank of Israel left its benchmark interest rate unchanged at 0.1% on Monday, citing a belief that inflationary pressures will ease further in coming months and that is likely to shift any rate increase into 2019.
All 13 economists polled by Reuters had forecast no change by the central bank in what was the 57th and final decision for Bank of Israel Governor Karnit Flug, whose five-year term ends next month and who opted not to seek a second term.
Speaking at a press conference, Flug, who replaced Stanley Fischer in 2013, said the bank's Monetary Policy Committee discussed the conditions necessary to withdraw from the bank's "very accommodative policies."
"The committee reached the conclusion that these conditions are still not fully in place," she said. "At the current time, the committee was of the opinion that it is still best to wait in order to verify … that the inflation environment is not just within the target but is entrenched within it."
Inflation eased to an annual rate of 1.2% in August from 1.4% in July, remaining within the government's target of 1% to 3% a year.
There had been a growing belief that after leaving the key rate unchanged since early 2015, policymakers would start tightening as early as the next decision on Nov. 26 – especially since the central bank's own economists had been projecting a 15-point hike in the fourth quarter.
But in an updated forecast on Monday, they pushed back the start of rate hikes to 2019, with an expectation of the rate ending at 0.5% next year for a total of 40 basis points of monetary tightening.
The delay stems from expectations that "there is likely to be a transitory decline in the inflation rate" to below the lower bound of the target range, the central bank said,
The bank's economists estimated an inflation rate in 2018 of 0.8% – down from a prior projection of 1.2% – and rising to 1.5% in 2019.
Flug referenced the postponement to next year but said the MPC was not committed to the forecast.
"The committee does not commit in advance to a date for the first interest rate increase," she said. "In any case, the [bank's] Research Department assesses that when the interest rate begins to rise, it will rise moderately, so that the interest rate gap with the United States will be maintained and even increase."
The bank's staff also maintained an economic growth forecast of 3.7% for 2018. It foresees 3.6% growth in 2019, up from a prior estimate of 3.5%.
