Israel’s Central Bank Interest Rate Left at 0.10%

February 27, 2017

Two full years have now passed since the last Israeli interest rate change, a 15-basis point cut to 0.1% from 0.25% undertaken in late February 2015. A released statement observed positive on-year CPI inflation last month for the first time since August 2014. At 0.1%, such is minuscule, however, and short-term inflation expectations are still below target. A firm shekel, up 3% against the dollar since January’s policy meeting and 7.4% higher than a year ago in trade-weighted terms, is one source of disinflationary pressure. “The risks to achieving the inflation target remain high, yet the increases in wages and in global inflation are expected to support the return of inflation to the target.” Prior to the aforementioned 15-bp rate cut two years ago, Israel’s central bank interest rate had been reduced by 75 basis in each of four consecutive years from 2011 to 2014. Today’s statement also observed heightened global uncertainty.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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