BoI keeps December interest rate unchanged

The Bank of Israel said that keeping the rate at 2% will support growth while maintaining financial stability.

In line with expectations, the Bank of Israel Monetary Committee today kept the interest rate for December unchanged at 2%, after lowering it by 25 basis points last month.

The Bank of Israel said that the decision was, "consistent with the Bank of Israel's interest rate policy, which is intended to entrench the inflation rate within the price stability target of 1-3% a year over the next 12 months, and to support growth while maintaining financial stability. The path of the interest rate in the future depends on developments in the inflation environment, growth in Israel, the global economy, monetary policies of major central banks, and developments in the exchange rate of the shekel."

The Bank of Israel said that the main considerations underlying the decision were, "The rate of inflation over the previous 12 months is at the midpoint of the inflation target range, and inflationary pressures are not visible. Various measures of inflation expectations for the coming twelve months are also around the midpoint of the target range."

On growth the Bank of Israel said, "Most economic indicators which became available this month support the assessment that moderate growth in activity has continued, and is expected to continue in the coming months. These indicators are consistent with the Research Department forecast of 3.3% GDP growth in 2012 and 3% growth in 2013."

The Bank of Israel went on to caution about global risks. "The level of economic risk from around the world remains high, and with it the concerns over negative effects on the local economy. Economic indicators point to moderate improvement in the US and Chinese economies, in contrast to continued recession in Europe and a deterioration in the economic situation in Japan. Inflation worldwide continues to be low, and commodity prices, which remained stable this month, are expected to continue to support the current level of inflation."

Published by Globes [online], Israel business news - - on November 26, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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