Bank of Israel: No Rate Change

March 25, 2013

The Bank of Israel statement following the March interest rate meeting, which was tucked in just prior to the Pesach holiday, unvealed a third consecutive decision to leave the benchmark interest rate at 1.75%.  Six cuts of 25 basis points apiece were implemented between September 2011 and December 2012.  Israeli growth slowed in 2012 and is expected to hover at or slightly under 4%.  Consumer prices rose 1.5% over the past year and is projected near the 2% 1-3% target midpoint over the coming year.  The shekel has appreciated.  However, monetary officials seek a slower rate of house price inflation, which accelerated to 8.6% in January from 6.7% in December.  Israel faces fiscal challenges.  Bank of Israel President Stanley Fisher is stepping down at midyear and not inclined to cut an already low interest rate further given current housing market conditions.  The next interest rate announcement will be on May 27, two months away.

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



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