Bank of Israel
August 29, 2016
Israel’s last central bank interest rate change occurred in February 2015. A 15-basis point cut then to 0.10% culminated 325 basis points of easing that had begun during 2011. This month’s statement from the bank of Israel notes that market-implied measures do not anticipate a rate hike before 2018, and the opportunity is not taken to discredit that presumption. By the same token, there’s no strong incentive to cut the rate. GDP grew almost 4% last quarter, an acceleration from the first quarter’s pace, although officials caution that it’s too early to tell if the faster pace will be sustained. On-year CPI inflation is still below zero at -0.8% but was higher than anticipated in the latest reported month. Expected inflation still lies below the target, and officials continue to view the shekel as overvalued, insofar as such rose 5.1% on a trade-weighted basis over the past year.
Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Israel