Zionist economists worry about hyperinflation in Israel

The International Economic Group of Fars News Agency: “Israel's economy has reached a critical crossroads at the end of 2023, in such a way that the Central Bank of the Zionist regime must think deeply before making any decision,” this was reported by the Israeli website i24news.

This website emphasized in a report that 2024 has started with many questions about the state of the world's strongest economies as more attention is focused on the continuation of inflation and the current increase in interest rates.

I-24 added: In recent months, the discussion about the impact of war expenses on Israel's economy has continued, and some say that Israel is on the path to disaster, and therefore the question arises whether the Bank of Israel should reduce interest rates in order to reduce tensions. but the reality is more complicated than it seems.

This Hebrew media stated that the Central Bank of the Zionist regime is facing two obstacles to reduce the interest rate, and said: The first factor is the American economy. The interest rate of the Central Bank of the United States of America is between 5.25% and 5.5%, but the economic data shows It is a strong and stable economy for this country and it is likely that interest rates in the US will remain unchanged until at least March and the current Federal Reserve Chairman confirmed that given the strong economic data and the low unemployment rate, it is unlikely that interest rates in cut in March because the Fed fears that faster interest rate cuts will boost inflation.With no rate cut by the Fed, the Bank of Israel (which has already cut interest rates by 25 basis points) before any additional action In this context, it will be in a sensitive position.

According to this report, the reduction of the interest rate by the Central Bank of the Zionist regime can lead to a decrease in the yield of government bonds, which will have a negative impact on the Israeli economy and the value of the currency. In addition, another reduction in interest rates could lead to a large outflow of money from Israel, as bonds from other countries could become more attractive, all of which could lead to a weakening of the regime's central bank.

I24 reported: The second factor that makes the Central Bank of Israel afraid of lowering interest rates is that the current figures of the Israeli economy raise concerns about hyperinflation, in a way that is out of control and with a rapid increase in the prices of goods and services. be accompanied

In this report, hyperinflation is described and emphasized as a real danger for Israel: an excessive, rapid and out-of-control increase in the general level of prices in the economy leads to the loss of the value of the national currency, as in Israel in the period between 1980 and 1985. It happened when the inflation rate reached more than 900%, so a rapid reduction in interest rates may lead to inflation rising to extreme levels, which is one of the biggest concerns of central banks.

At the end of this note, the Israeli website “i24” predicted that “the topic of interest rate cuts will be one of the hot topics this year, and everyone will try to guess whether the Central Bank of Israel will cut interest rates or keep them the same.” It keeps its shape. The current equation for the Bank of Israel is very complex and every action requires deep thinking. Therefore, many things may change before we see a clear and decisive move by the Bank of Israel on interest rate policy.

Regarding the effect of interest rate on economic growth, it should be said that based on standard monetary policies, the interest rate should be chosen in such a way that there is a balance between this rate and economic growth. Its excessive increase causes a decrease in economic growth and an excessive decrease leads to other problems such as an increase in inflation. To put it more simply, the increase of this rate causes a decrease in banking facilities, gross domestic product, and as a result, a decrease in economic growth. An increase in interest rates also makes investors less willing to invest in long-term projects. In other words, with the increase of this rate, the cost of providing capital increases. As a result, investors are more inclined to invest in short-term projects and bank deposits.

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