Bank of Israel Keeps Key Interest Rate at 0.10%

July 25, 2016

Almost a year and a half have elapsed since the last Israeli interest rate change, which was a 15-basis point cut in February 2015.  The previous four calendar years had seen the rate reduced from 3.25% to 0.25%.  A statement released by Bank of Israel policymakers after this month’s review defended the appropriateness of the current stance and observed stable and low medium- to long-term inflation expectations as well as market expectations that the central bank interest rate is unlikely to change over the coming year.  Inflation is projected to drift upward from sub-target territory on diminishing negative base effects, and moderate growth prospects haven’t changed.  A paragraph addresses the Brexit vote.  The good news there is that the initial disturbance to global financial markets was temporary and that the main enduring effect has been limited to a significant drop in sterling and lower European share prices.  The bad news is that Brexit still poses a high source of longer-run uncertainty.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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