Bank of Israel denies report governor will declare not seeking new term

Bank of Israel Governor Amir Yaron gestures while he speaks during his interview with Reuters in Jerusalem

By Steven Scheer and Maayan Lubell

JERUSALEM (Reuters) -The Bank of Israel denied a report that Governor Amir Yaron will on Monday announce that he will not to seek a second term, reiterating he would make his decision around September-October.

Earlier, Army Radio - one of two main radio channels in Israel - reported that Yaron would on Monday make public his decision to not seek another term. His current five-year appointment expires at the end of the year.

"The report this morning by Army Radio that the governor will deliver his decision today regarding the extension of his term is incorrect. As he has said until now, the governor will deliver his decision on extending his term around the (Jewish) holiday season," Bank of Israel said.

A spokesperson for the central bank did not immediately respond when asked what Yaron's decision was.

The issue of whether he would seek or be reappointed to a second term has been looming over financial markets for months. Yaron has said he would make his decision around the Jewish high holy days, a three-week period which runs from Sept. 16 through Oct. 7.

Yaron has not tipped his hand either way but he has been critical of the economic impact of a plan by Prime Minister Benjamin Netanyahu's government to overhaul Israel's judicial system. Yaron has also clashed with lawmakers over sharp interest rate increases since April 2022 that have boosted bank profits while hurting mortgage holders.

Army Radio also reported, without citing sources, that Netanyahu would choose economist Leo Leiderman to replace Yaron.

Netanyahu's office declined to comment.

Leiderman, a former professor of Yaron, in 2013 was chosen by Netanyahu to replace outgoing governor Stanley Fischer but he withdrew his candidacy.

He told Reuters that he has not been approached for the central bank governor's role and wants to stay in his positions as economist at Bank Hapoalim and Tel Aviv University.

"I strongly recommend the government to nominate again Professor Amir Yaron for a second term as governor of the Bank of Israel," he said.

Netanyahu in 2018 chose Israeli-born Yaron, a professor at the Wharton School of the University of Pennsylvania, to head Israel’s central bank, citing the need for an expert on the global economy.

Yaron succeeded Karnit Flug, who opted not to seek a second term.

Later on Monday, Yaron and the monetary policy committee will decide on interest rates. A Reuters poll showed 15 of 16 economists expect the benchmark rate to stay at 4.75% for a second straight meeting in the wake of the inflation rate easing to 3.3% in July.

In early trading, the shekel was 0.3% weaker at a 3.805 rate versus the dollar, its weakest level since March 2020.

(Reporting by Maayan Lubell and Steven Scheer; Writing by James Mackenzie; Editing by Jamie Freed and Shri Navaratnam)