No Change This Month in Israeli Benchmark Central Bank Rate

February 27, 2012

The Bank of Israel’s key interest rate has been kept at 2.5% for the coming month.  At previous monthly meetings, such was cut by 25 basis points in late January, left unchanged in December, reduced 25 bps in late November, held steady at 3% in October and cut a first time back in September.  A series of ten rate hikes from March 2009 to May 2011 had lifted the interest rate by 275 basis points from 0.5%, and that tightening followed eight cuts between August 2008 and March 2009 totaling 375 basis points.  The Bank of Israel has a revealed track record of aggressive counter-cyclical demand management but with a foundation of inflation targeting.   Actual and expected inflation happen to lie within target, but the expected measure ticked higher this past month, according to a statement released by the Bank of Israel.  However, the statement indicates that expected inflation was marginally higher in the latest month than ones previously.  Real economic growth since last summer has continued to slow and is projected to average 2.8%.  Next month’s rate decision with be revealed on March 26.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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