Bank of Israel keeps interest rate at 3%

Today's interest rate decision was the first by the six-member Monetary Committee pursuant to the new Bank of Israel Law.

The Bank of Israel kept the interest rate for November unchanged at 3%.

Today's interest rate decision was the first by the six-member Monetary Committee pursuant to the new Bank of Israel Law (5770-2010). The Monetary Committee has six members. The committee members are Governor of the Bank of Israel Prof. Stanley Fischer, Deputy Governor Dr. Karnit Flug, senior advisor to the governor Barry Topf, and three public members - Prof. Reuben Gronau, Prof. Rafi Melnick, and Prof. Alex Cukierman.

The Bank of Israel said that keeping the interest rate at its current level gives it room to respond to events in the global and local economies. It added that the decision to keep the interest rate unchanged after last months 25-basis point cut was due to the continuing decline in 12-month inflation expectations to 1.7-2.2%, the decline in inflation over the preceding 12 months, the slowing growth rate, and concerns of a negative turnaround in the eurozone due to the difficulties in formulating a rescue plan for countries suffering debt crises. It added that while concern about a negative turnaround US have not dissipated, recent macroeconomic figures were better than expected. Nonetheless, the level of uncertainty regarding developments in the global economy remains especially high, and clearly impacts on uncertainty regarding developments in Israel's economy.

As for the housing market, the Bank of Israel said that increase in home prices over the twelve months through August remains relatively stable at a high level of over 12%, below last year's level of 20% growth. With that, the sustained increase in building starts, the lagged effect of the increase in the interest rate, measures taken by the Bank of Israel with regard to mortgages, and changes in real estate taxation introduced by the Ministry of Finance, are expected to continue to contribute to moderation in home prices over the coming year

Published by Globes [online], Israel business news - www.globes-online.com - on October 24, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018