Bank of Israel Engineers Unexpected Interest Rate Cut

July 28, 2014

Israel’s key lending interest rate was lowered to 0.5% from 0.75%.  This was the eleventh such cut since September 2011 and the second of 2014, the other being done five months ago in February.  A released statement justifies the action by citing continuing sub-target CPI inflation, a 0.8% trade-weighted rise of the shekel since the June meeting, subdued global growth, low global interest rates, and the unknown potential drag of the military war in Gaza.  In the year to June, total consumer prices rose just 0.5% versus a target of 1-3%, and the CPI excluding housing costs slipped by 0.2%.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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