Bank of Israel Announced Interest Rate Reduction

June 25, 2012

Israel’s policy interest rate was sliced as expected at the June monthly meeting by 25 basis points to 2.25%.  Such was the fourth such decline since September 2011 and the first since January 23, 2012.  From a low of 0.5% at the start of 2009, the rate was previously raised by 75 basis points each in 2009 and 2010 and by 125 basis points in the first five months of 2011 to a high of 3.25%. 

A statement from the central bank found today’s rate cut warranted because CPI inflation had slipped below the 2% midpoint of a 1-3% target, printing in May at 1.6.  Expected inflation is hovering around the target midpoint, and economic growth prospects are only moderate at 3-3.5%.  The outlook for global growth has darkened, and the interest rates of major economies remain very low.

The next policy interest rate announcement is scheduled for July 23rd.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



Comments are closed.