Israeli Central Bank Interest Rate Lifted by 50 Basis Points

March 28, 2011

The Bank of Israel implemented a third consecutive interest rate hike.  It was the ninth tightening since normalization began in August 2009 and the first one to exceed 25 basis point in size.  A statement published on the Bank of Israel’s web site called monetary policy still expansionary.  CPI inflation now slightly exceeds 4.0% versus a 1-3% target, and expected inflation has also crept upward to around 4%.  House prices are 16.3% higher than a year earlier, and other central banks in advanced economies are starting to raise their rates.  The Shekel rose following today’s bigger-than-projected rate hike to a near 2-1/2 year peak against the dollar.  This more forceful counter-weight against inflation points to further rate increases in the near term.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



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