Policy Pause Continues at the Bank of Israel

August 27, 2012

Four 25-basis point central bank interest rate reductions had been implemented in September 2011, November 2011, January 2012 and June 2012, trimming the level to 2.25% from 3.25%.  But this month as in July, Bank of Israel policymakers decided to to ease monetary policy further.  A statement released today following the monthly meeting stressed that inflation of 1.4% is in the lower half of the 1-3% target range but that expected inflation rebounded “markedly” this past month.  Growth continues to trend at about 3%, property price inflation has simmered down, and global economic uncertainties remain high.  The Bank of Israel’s key interest rate was slashed to 0.5% in the Great Recession but lifted by 75 bps in 2009, 75 bps in 2010, and 125 bps during the first five months of 2011.

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

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