ERUSALEM, Feb 22 (Reuters) - Israeli Prime Minister Benjamin Netanyahu on Wednesday instructed lawmakers from his Likud party to stop interfering with and speaking out against Bank of Israel Governor Amir Yaron and his interest rate policies.
Netanyahu's rebuke, made public by a party spokesperson, came after his Foreign Minister Eli Cohen criticized Bank of Israel interest rates hikes and other lawmakers voiced disapproval with Yaron over the rate hikes, which in turn led to a big surge in mortgage rates.
Cohen on Wednesday clarified on Twitter that he supported central bank independence.
Yaron has taken a hard line in battling inflation, which hit a new 14-year high of 5.4% in January. The central bank raised interest rates by half a percentage point at a policy meeting on Monday to 4.25%, its eighth hike since last April.
The governor has also warned lawmakers who have been pushing for judicial changes that could weaken the Supreme Court, that institutional independence was vital for Israel's sovereign credit rating.
"Prime Minister Netanyahu ordered Knesset members of Likud to stop interfering and speaking on the issue of the governor," said a Likud spokesperson. "The independence of the Bank of Israel is a central pillar of the economic policy led by the Prime Minister for two decades and nothing will change that."
Some analysts believe that part of the shekel's recent depreciation versus the dollar stems from political attacks on the central bank. The shekel has weakened some 10% the past month, mainly on planned changes to Israel's judiciary.
On Tuesday, Finance Minister Bezalel Smotrich, who is not in Likud, said: "One must not even hint at hurting the Bank of Israel's independence because that is key to our economic stability."
Moshe Gafni, head of one of Netanyahu's ultra-Orthodox partners and chairman of parliament's finance committee, has attempted to bring a law that would freeze interest rates on mortgages after central bank rate hikes. But that bill was delayed.
