Bank of Israel Key Rate Left Unchanged

July 25, 2011

Israel’s main central bank rate will stay at 3.25% for at least another month.  It was raised from a trough of 0.5% by 75 basis points in 2009, 75 bps in 2010, and 125 bps earlier this year.  The most recent change was enacted in May, a gain of 25 bps.

A statement on the Bank of Israel web site notes that inflation, although excessive in on-year terms at 4.2%, has shown an in-target underlying pace over the latest four reported months.  Measures of expected inflation are at or below target, house price inflation has slowed, the shekel has risen, economic growth last quarter appears softer than in 1Q11, and central banks in the advanced economies are keeping their key interest rates low.

Over time, more increases seem probable.

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



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