Bank of Israel chief Karnit Flug speaks at a press conference in Jerusalem, during the presentation of the Israel bank’s annual report. Photo: Hadas Parush / Flash90. – The governor of the Bank of Israel warned on Thursday that a trade war between the United States and China would be “bad news for the Israeli economy,” in an interview with Bloomberg TV.

Central Bank of Israel Governor Dr. Karnit Flug said, “I think if we go back from free trade this is bad news for the global economy, and it’s certainly bad news for small, open economies such as Israel’s … I think we all benefit from free trade.”

She also related to the strengthening Israeli shekel, which she said was a reflection of the fundamentals of Israel’s economy.

According to Bloomberg, the shekel grew 3.6 percent in the final quarter of 2017. It further attributed the shekel’s strength to the monetary policy of the European Central Bank.

While the U.S. Federal Reserve has begun to raise interest rates, Flug noted that Israel’s policy would only be guided by local conditions.

The Bank of Israel has kept its key interest rate at an all-time low of 0.1 percent for the past three years

“I think that tighter monetary policy, to the extent that it reflects better economic performance in the U.S., is good news for the Israeli economy,” she said. “But generally, our policy is based on developments here.”


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