"We believe that the measures taken by the Bank of Israel and the Ministry of Finance will ultimately result in a slowing in home prices over the coming year. Nonetheless, in view of the latest figures, additional policy measures may be needed, including in monetary policy," says DS Brokerage in its macroeconomic survey today.
"We have not even stopped celebrating the drop in the number of real estate transactions in the third quarter, and we've already received the October new home sales figures, which show a jump in housing demand," says DS Brokerage.
DS Securities and Investments chief economist Alex Zabezhinsky predicts that Governor of the Bank of Israel Prof. Stanley Fischer will raise the interest rate for January 2011, and that he will make more rate hikes to 3.25-3.5% by the end of the year. He also says that inflation for the last 12 months was 3.2%, and will be 2.8% in 2010, assuming that the Consumer Price Index (CPI) rises by 0.2% in November and 0.3% in December.
DS says, "Unless major changes occur in the circumstances, the Bank of Israel will raise the interest rate at its next monetary council meeting. The pace of increases may still be fairly slow in the coming months because rises in the CPI are low for seasonal reasons during these months, and because of expansionist monetary policies in the US and Europe. The pace of interest rate hikes will pick up toward the end of the first quarter of 2011. The longer the Bank of Israel postpones interest rate hikes, the greater the risk of inflation and of a greater hike in the future."
Published by Globes [online], Israel business news - www.globes-online.com - on November 28, 2010
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