Bank of Israel Interest Rate Benchmark Left at 2.0%
November 22, 2010
Israel’s central bank has implemented six 25-basis point rate hikes since August 2009, the latest being done in September of this year. Today, as in October, the key rate was left at 2.0%, but this time the rate corridor in the credit window was doubled from plus or minus 0.25% to plus or minus 0.50%. That step, like the six rate hikes done earlier, was portrayed part of a policy normalization process in a statement released today. Israeli GDP expanded 3.8% annualized during the third quarter and by 4.3% from a year earlier. CPI inflation of 2.5% now is seen likely to accelerate above target during 1H11 but to settle back into target thereafter. Elevated house price inflation and slight above-target expected inflation are being monitored, but officials are also sensitive to the danger that with many central banks having still-low interest rates that tightening in Israel might exert excessive upward pressure on the shekel.
Copyright Larry Greenberg 2010. All rights reserved. No secondary distribution without express permission.
Tags: Israel
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