Bank of Israel Governor Concerned After Netanyahu's Incitement Speech
Translated & summarized from Maariv by baba
Bank of Israel Governor Amir Yaron expressed concern over prolonged budget uncertainty after hearing Netanyahu's speech and subsequent debates, predicting it could last until mid-2027. The government formation is seen as the immediate priority, with political debates hindering budget approval. Despite some market volatility and geopolitical concerns, the stock market has shown positive returns in 2026, though potential inflation increases are anticipated.
The story in 5 lines · by baba
- Bank of Israel Governor Amir Yaron is concerned about budget uncertainty lasting until mid-2027.
- Political debates are delaying the formation of a government and budget approval.
- The stock market has shown positive returns in 2026 despite recent volatility.
- Investors are prioritizing government stability and budget approval for market confidence.
- Inflation is expected to rise due to currency depreciation and subsidy changes.
Bank of Israel Governor Professor Amir Yaron attended a celebratory toast for the new Knesset and listened to a speech by Netanyahu, followed by subsequent debates. He emerged from the event concerned about the prolonged budget uncertainty, which he believes could extend until at least mid-2027. Yaron emphasized that forming a government is the immediate priority.
The article also discusses the urgency of passing a state budget, noting that the Finance Ministry plans to finalize an economic package next week despite delays in government formation. However, tax measures can only be implemented as part of a full budget, and mid-year implementation is difficult due to computational and retroactive taxation challenges. The author criticizes the ongoing political debates, likening the situation to buying a car but refusing to start it, suggesting that arguments over issues like the Haredi community or alleged vote-buying could persist until the mandate to form a government expires.
Regarding the stock market, the article notes that despite October's negative returns, the overall performance from January to October 2026 has been positive, with general track returns at 6.4% and stock track returns at 10.6%. This optimism is supported by the Tel Aviv Stock Exchange's third-quarter reports, showing a 31% increase in revenue and a 74% jump in profit. Daily trading volume in stocks rose by 52.4%. However, potential geopolitical events, such as an attack on Iran, and the political uncertainty following the election results have created a negative sentiment. Investors are prioritizing the swift formation of a government, budget approval, and reform implementation to signal stability and reduce risk.
Despite recent market fluctuations, the article reminds readers of the strong performance in 2024-2025, where some stocks doubled in value, and Elbit Systems stock yielded 400% over five years. It cautions against speculative investments made at peak prices, which have led to losses for some. The upcoming October index, expected to rise by 0.5%, will provide further insight into market trends. The author anticipates inflation exceeding 2% annually, potentially reaching 2.5%-3%, due to the shekel's depreciation against the dollar and the cessation of fuel subsidies, which will likely increase the prices of water, electricity, and public transportation.