No Change in Key Israeli Interest Rate

December 28, 2010

The Bank of Israel’s key interest rate was left at 2.0%, matching expectations.  There so far have been six increases of 25 basis points each but none since September.  In a released statement, monetary policy was called “expansionary” and in a gradual return to more normal levels, but several reasons were given for not raising the rate further at this time:

  • Real estate price inflation, which had been excessive, has decelerated.
  • The central bank rates in advanced economies are likely to remain low for a long time.
  • The shekel appreciated since the November rate decision.
  • Indications of expected inflation have fallen and are now below their target ceiling.
  • Euroland’s debt crisis poses a downside risk to Israeli growth.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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