Bank of Israel Holds Policy Rate Steady after Making Two Cuts in May
June 24, 2013
A decision to not cut Israel’s central bank interest rate more further was anticipated by a majority but not all analysts.
- The Bank of Israel had implemented two 25-basis point cuts in May and eight cuts since September 2011.
- At 1.25%, the key rate is back to its end-2009 level.
- Rising U.S. bond yields may alleviate some upward pressure on the shekel in coming months.
- Although on-year CPI inflation of 0.9% last month was below the 1-3% target, BOI officials expect the CPI to rise 2.1% over the coming year.
- Expected inflation in the market place remains near the target mid-point.
- GDP growth has slowed recently and is likely to be marginally below 3% this year and next.
- This was the final meeting for Governor Stanley Fisher. Jacob Frenkel, who held the post in 1991-00, is coming back to head the central bank.
Copyright 2013, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Israel
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