Bank of Israel Leaves Central Bank Rate at 0.10% and Signals Reluctance to Start Normalization Anytime Soon

October 8, 2018

Forty four months have elapsed since the last Israeli central bank change, a cut of 15 basis points to 0.10% in February 2015. Inflation is still too low to begin raising the rate.

The inflation environment has not changed markedly since the previous interest rate decision, despite slightly lower than expected recent CPI readings: The annual inflation rate is in the lower part of the target range, and expectations for the various ranges remained in their environment of the previous interest rate decision. Nevertheless, the Monetary Committee assesses that the forces supporting an increase in inflation still prevail; the main risk to the entrenchment of inflation within the target is the possibility of a sharp appreciation in the shekel.

The Monetary Committee intends to maintain the accommodative policy as long as necessary in order to entrench the inflation environment within the target range. The Bank of Israel continues to monitor developments in inflation, the real economy, the financial markets, and the global economy, and will act to attain the monetary policy targets in accordance with such developments.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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