Those who will need to decide where to cut will need to make tough decisions, but in the final analysis, after all of the cuts, this will be an expansionary budget, and I feel sufficiently at ease with such a budget. The Bank of Israel’s monetary policy is successfully keeping inflation within the target range most of the time.
Currently, both inflation and inflation expectations are within an easy environment, but we must not become complacent about inflation. A central bank governor who acts that way will find himself forced to deal with inflationary developments later on. We are constantly watching, with a magnifying glass, for any appearance of inflationary signs.