Israel to Pick New Central Bank Governor in 2 Weeks, Bennett Says

TEL AVIV (Bloomberg News) -

Israel may appoint a new governor for the Bank of Israel within weeks following the withdrawal of two candidates to replace Stanley Fischer, Minister of Economy Naftali Bennett said.

A vacuum at the helm of the central bank “isn’t great,” he said Thursday in an interview with Bloomberg. Fischer, former vice chairman of Citigroup and onetime thesis adviser to Federal Reserve Chairman Ben Bernanke at Massachusetts Institute of Technology, left office in June. Fischer’s deputy, Acting Governor Karnit Flug, is in charge.

“We’re doing a meticulous job,” Bennett, 41, said, “and that’s why we’re going to have a central banker within a couple of weeks.”

Flug surprised markets on Sept. 23 with a quarter-point reduction in the bank’s benchmark rate to 1 percent, sending the shekel lower for the first week in three. The decision on a successor will be taken by Prime Minister Binyamin Netanyahu in consultation with Finance Minister Yair Lapid and must be approved by the cabinet.

Haaretz reported on Sept. 29 that Netanyahu is looking for new candidates beyond the three currently under consideration.

Israel can continue for several months without a central banker and weather the embarrassment of losing Netanyahu’s first two nominees, said Alex Zabezhinsky, chief economist of DS Investment House in Tel Aviv.

“The credit agencies say it’s not good, but it’s not dramatic,” he said. “We also see uncertainty in the U.S. over Bernanke’s successor” after former Treasury Secretary Lawrence Summers withdrew his name.

Bennett, a frequent critic of Netanyahu though once his top parliamentary aide, said the prime minister was right to excoriate Iranian President Hassan Rouhani at the United Nations this week. Netanyahu called Rouhani a “wolf in sheep’s clothing.”

“Do we hope the diplomatic process will bring the dismantling of Iran’s nuclear project, yes we hope so,” Bennett said, adding the chances of that happening are “very low.”

Bennett returned from a trade mission to China two days ago and heads for India next week. “We’re opening up very powerfully to the East,” where he seeks “to diversify Israel’s export portfolio” beyond its biggest markets in Europe and the U.S.