Israel

Nearly 70% of Israeli startups have taken action to relocate parts of their business outside Israel, a survey released on Sunday by an Israeli non-profit organisation on the government's planned judicial overhaul found, Reuters reported. The survey by Start-Up Nation Central sought to measure the economic impact plans by the hard-right coalition of Prime Minister Benjamin Netanyahu that would restrict the Supreme Court's powers to strike down legislation.

The Bank of Israel left short-term borrowing rates unchanged on Monday for the first time in more than a year amid signs of easing inflation, but warned that rates could still be hiked further if the moderation in price growth did not continue, Reuters reported. The central bank kept its benchmark rate at 4.75% - its highest level since late 2006. It had raised rates 10 straight times in an aggressive tightening cycle that has taken the rate from 0.1% last April. "Inflation is broad and remains high.

All five members of the Bank of Israel's monetary policy committee voted on May 22 to raise the benchmark interest rate by 0.25 percentage points to 4.75%, minutes of the discussion showed on Monday, Reuters reported. "The committee members noted that economic activity in Israel is at a high level, and is accompanied by a tight labour market, although there is some moderation in a number of indicators. Inflation is broad and remains high," the minutes said. Read more.

The government's plan to overhaul the judicial system is harming investor confidence and pushing high-tech firms to relocate abroad, Israel's state-backed agency that supports high-tech companies said on Monday, Reuters reported. A survey by the Israel Innovation Authority found 80% of startups established so far this year were opened outside Israel and that companies also intend to register their future intellectual property overseas - which would result in a severe blow to Israel's tax coffers.

Bank of Israel Deputy Governor Andrew Abir suggested on Monday that more interest rate increases were possible as inflation remains "sticky" above a 5% rate, Reuters reported. He was speaking to Reuters the central bank raised its benchmark interest rate by a half a percentage point to 4.25%, its highest level since late 2008.

A voting member of the Bank of Israel’s monetary committee stepped down and warned that “democracy is in danger” in his country, marking one of the highest-profile departures since Prime Minister Benjamin Netanyahu began his push to reform the judicial system, Bloomberg News reported. Moshe Hazan, an economics professor who spent more than five years on the rate-setting panel, sent Netanyahu a resignation letter late Sunday, saying he was leaving to become more involved in “public-political activity,” according to a statement from the central bank.

The head of Israel's powerful parliamentary finance committee submitted a bill on Monday that would limit banks' ability to raise mortgage rates after central bank interest rate increases, Reuters reported. The Bank of Israel has raised its benchmark interest rate by 3.15 percentage points to 3.25% since April, with more hikes likely. Monthly mortgage repayments have soared by more than 1,000 shekels ($291), with high inflation an additional factor.

Bank of Israel Governor Amir Yaron on Tuesday warned lawmakers not to interfere with monetary policy decisions, and said the "magic solutions" they proposed to blunt the impact of interest rate hikes would hurt the weakest sectors of the economy, Reuters reported. Yaron's comments appeared to be a response to the head of the Israeli parliament's powerful finance committee, Moshe Gafni, who on Monday criticised a wave of central bank interest hikes and proposed legislation to shield mortgages from rate increases.

The Bank of Israel is still in the process of front-loading interest rates and will likely raise rates to above 3.5%, Deputy Governor Andrew Abir said on Monday after a half-point rate increase to 2.75%, Reuters reported. Abir told Reuters that the central bank preferred "to err on the side of making sure we get inflation down" with its monetary policy. That means, he said, that the benchmark rate would likely go above the bank's own economists' forecast of 3.5%. Read more.

The Tel Aviv Stock Exchange (TASE) said on Monday it would reshape its ownership structure and also create a blockchain platform to allow more trading of crypto currencies in an effort to match international standards, Reuters reported. TASE, which went public in 2019, said it would create a new publicly traded holding company that will own 100% of the bourse, which will become a private firm. Subsidiaries of the exchange will be units of the new holding company. It said its board had given the nod to the plan but approval from the regulator and TASE shareholders were still awaited.