Remarks by the Bank of Israel Governor at the 2025 National Energy Conference held by the Israeli Institute of Energy and Environment

The Governor of the Bank of Israel delivered remarks this morning at the National Energy Conference.

The Governor noted that Israel entered the war in a relatively strong economic position. The economy has demonstrated proven resilience in recovering from previous crises, and the high-tech sector continues to serve as a stable growth engine. After significant setbacks in the initial period of the war, the economy has shown improvement in recent quarters, although there are still excess demand pressures, and supply constraints continue to hinder the closure of the output gap from its trend.

Inflation remains above the target, partly due to tax increases, but is expected to moderate to within the target range in the second half of the year. The risk premium, which rose due to the war, has recently eased, and the continuation of responsible fiscal and monetary policies is crucial for maintaining market confidence.

The Governor emphasized that the budget composition for 2025 includes significant adjustments that have contributed to market confidence, and that it is of great importance to approve the budget in its current form to maintain stability, even though its composition leave room to strengthen the growth engines in the budget.

In parallel, we must continue to deal with long-term challenges, with a focus on increasing productivity in the economy, improving the quality of education, and increasing participation and employment rates among various population groups.

In view of recent publications, the Governor was asked to address the issue of extending the appointment of the Deputy Governor and stated the following: "Throughout my tenure as Governor, the Prime Minister has always recognized the importance of the independence of the Bank of Israel and the Governor, and of maintaining it. This independence is a cornerstone of a developed economy and a key reason for confidence in the central bank and in the Israeli economy as a whole. I hope this will be the case this time as well, and that the Deputy Governor's appointment will be approved this week."