Bank of Israel Interest Rate Policy Continues in Extended Pause

December 29, 2014

Israel’s central bank interest rate of 0.25% over the past four months is not likely to change in 2015 according to the latest Bank of Israel statement that defends today’s decision not to modify policy.

The Bank of Israel interest rate is expected, according to the staff forecast, to remain at 0.25 percent throughout 2015 and to increase slowly in 2016.

Consumer prices slid 0.1% between November 2013 and November 2014, and inflation next year is projected to hover near the floor of the central bank’s 1-3% target range.  On the other hand, projected growth in 2015 was revised slightly higher to 3.2%, and a further expansion of 3.0% is expected in 2016.

Three interest rate cuts apiece were administered in 2011, 2012, 2013 and 2014, reducing the central bank benchmark from 3.25% to its current 0.25% level.  All 12 of those cuts were by 25 basis points.  The three reductions in 2014 were made in February, July and August.  The Monetary Committee meets monthly near the end of the month and has scheduled the January meeting for the 26th.

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

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