(Clarifies reason Frenkel withdrew bid)
JERUSALEM, July 31 Leo Leiderman, chief
economist at Israel's largest bank who has in the past
criticised the low interest rate environment, has been nominated
as the next central bank governor.
The decision on Wednesday came two days after Jacob Frenkel,
Bank of Israel chief in the 1990s, withdrew his bid after media
reports of a suspected shoplifting incident in 2006, which he
denied and over which no charges were ever filed.
In appointing Leiderman, Prime Minister Benjamin Netanyahu
and Finance Minister Yair Lapid opted against front-runner
Flug, who had been at the Bank of Israel for 25 years and
served as deputy Bank of Israel chief and is now acting
governor, said she would step down a month after the new
governor is in place and gets to know the system.
"I am excited to get back to the Bank of Israel and I will
work to help Israel's economy in the challenges it faces,"
Leiderman said in a statement.
His nomination still needs confirmation from a committee
that vets senior civil servants and the cabinet.
The Argentinian-born Leiderman, chief economist at Bank
Hapoalim, was likely chosen because of his
international credentials such as serving as head of emerging
markets research at Deutsche Bank in the early 2000s.
He inherits an economy that is slowing due to the global
downturn, tame inflation, and a benchmark interest rate of 1.25
"Judging by his recent comments regarding the Bank of
Israel's monetary policy, it seems like Leiderman has a more
hawkish stance than the current MPC (monetary policy committee)
members," said Yonnie Fanning, an analyst at ILS Brokers.
Leiderman, who spent 10 years at the Bank of Israel in the
1990s, initially supported the steep interest rate cuts at the
outset of the global financial crisis but the past few years he
has said rates were too low.
Interest rates in Israel are set by a six-member MPC.
(Reporting by Steven Scheer; editing by Ron Askew and Sonya