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.



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