This is the third successive time that the Bank of Israel has left the interest rate unchanged, as inflationary pressures continue in the Israeli economy.
As forecast in its decision announced today, the Bank of Israel has kept its interest rate at 4.5%. This is the third successive time that the Bank of Israel has left the interest rate unchanged. Analysts expected the decision, in the light of the inflationary pressures seen in the past few months, as well as the geo-political uncertainty weighing on the Israeli economy.
One of the reasons for keeping the interest rate unchanged is the rise in the rate of inflation, which was running at an annual 2.8% in April. The banks and investment houses expected the annual rate of inflation to fall to 2.5%, and the surprise in the Consumer Price Index led many economists to estimate that inflationary pressures will be with us for months to come.
“There has been some increase in the inflation environment. Inflation in the past 12 months is 2.8 percent. Inflation expectations and forecasts from the various sources for the coming year increased, and are around the upper bound of the target range. Expectations for the second year and forward are within the target range, in its upper portion,” the Bank of Israel Monetary Committee stated in its interest rate announcement today.” The committee stresses that “In view of the war, the Monetary Committee’s policy is focusing on stabilizing the markets and reducing uncertainty, alongside price stability and supporting economic activity. The interest rate path will be determined in accordance with the continued convergence of inflation to its target, continued stability in the financial markets, economic activity, and fiscal policy.”
Published by Globes, Israel business news – en.globes.co.il – on May 27, 2024.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.
Bank of Israel Governor Amir Yaron credit: Eyal Izhar, Tali Bogdansky