Bank of Israel Ends Bond Buying
July 27, 2009
The Bank of Israel ended daily secondary market purchases of bonds but retained an ultra-low 0.5% benchmark interest rate. Monetary officials reacted to more normal capital market functionality, evidence of higher expected inflation near its upper target and a bigger-than-anticipated June CPI jump of 0.9% and 3.6% year-on-year. The bond buying plan, which ends on August 5, was relatively short-lived, having been announced in mid-February and implemented on March 25th. Immediate plans are for those purchases to be held, not sold.
Israel’s recession slowed last quarter, possibly altogether, but it’s premature to declare recovery. Growth is expected to remain tepid at best. The central bank rate had been at 4.25% prior to last October was was cut eight times and has been at 0.5% since March.
Copyright Larry Greenberg 2009.
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