Sources inform ''Globes'' that the Bank of Israel will probably revise its growth forecasts downward. Although the revision of the 3.7% GDP growth forecast for 2010 will probably only be changed marginally, the 4% growth forecast for 2011 is likely to be slashed.
A large part of Israel's growth forecast is derived from global growth forecasts, and when international institutions revise these forecasts, Bank of Israel officials have no choice but to the same.
"These are not ordinary times at the Bank of Israel," admitted a top official. "The monetary forum is meeting more often."
The Bank of Israel is monitoring developments in Europe with concern. Sources at the bank say that Governor of the Bank of Israel Prof. Stanley Fischer will probably slow the pace of interest rate hikes and that the real interest rate will continue to be negative over the next 12 months.
Ahead of next Monday's interest rate decision, capital market sources have felt that Fischer "must" raise the interest rate, but it is not at all certain that he will do so. Despite objective reasons favoring a rate hike, the difficult images from Greece and the real fears that they raise could prove decisive.
Published by Globes [online], Israel business news - www.globes-online.com - on May 20, 2010
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