Bank of Israel

March 24, 2014

Israel’s benchmark central bank lending rate, which was cut by 25 basis points on February 24 and by 250 basis points since September 2011, was left unchanged at 0.75% after today’s monthly meeting. A statement from officials predicts that CPI inflation, which fell to 1.2% in the 12 months to February from 1.4% on year in January, will dip under the 1-3% target floor later this year but move into the lower part of the target range early next year.  Once disinflationary factor is the rising shekel, up 8.2% since end-2012 in trade-weighted terms.  Another is the moderate pace of growth.  House price inflation is easing.  The statement asserts that today’s decision will promote achievement of the medium-term inflation goal.  At 0.75%, the key interest rate is only 25 basis points higher than its Great Recession trough of 0.50%.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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