Bank of Israel Governor Stanley Fischer admitted Monday that the protests over the high cost of living took him by surprise, and said the problem was mainly a result of market concentration.
Speaking at a press conference at his Jerusalem office, Fischer called for the establishment of a committee on the cost of living to check the disparity in prices between Israel and the rest of the world, saying,
“I assume the problem is a lack of competition.”
He added, “We pay too much for vehicles because of the import tax, among other things, which is there to prevent pollution. We can’t change that without attending to the relevant infrastructure.”
Fischer spoke in depth about the housing crisis, rejecting criticism that the blame for soaring prices could be pinned on his dramatic lowering of the benchmark interest rate from September 2008.
“Had we not lowered the interest rate and just kept it at 4.25 percent, we wouldn’t have a housing problem, but instead we would have an unemployment problem similar to that of the USA and Europe, where it has reached almost 10 percent,” he said. “In addition, had the interest rate been higher there would not have been more homes but rather fewer.”