Bank of Israel: No Policy Change after January Meeting

January 28, 2013

Monetary policymakers did not change policy this month but released a statement that was ambivalent about the next change either as to direction or timing.  Analysts were somewhat surprised when the Monetary Policy Committee cut their benchmark interest rate by 25 basis points to 1.75% in December.  That was the fourth such reduction of 2012 and the sixth since the rate had crested at 3.25% over the four months to late September 2011. 

Today’s statement noted that CPI inflation over the coming year is a tad below the 1-3% target midpoint. of 2%.  The statement anticipates underlying growth excluding gas of almost 3% this year and observes that global risks at long last seem to be subsiding.  House price inflation, which accelerated to above 5% recently, is being watched.  The shekel strengthened over the period since the December meeting.  It will likely take a further slowdown of domestic growth and CPI inflation to prompt another rate cut.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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