The Bank of Israel Monetary Committee today kept the interest rate for August unchanged at 1.25%. This is the first interest rate decision since the departure of former Governor Prof. Stanley Fischer at the end of June. Dr. Karnit Flug is serving as acting-Governor until Prof. Jacob Frenkel assumes the post later this year if his appointment is approved.
The Bank of Israel lowered the interest rate by 50 basis points in May but kept it unchanged last month.
in its latest decision, the Bank of Israel cited 12-month inflation expectations, which are below the midpoint of the inflation government's 1-3% target range, after the inflation rate over the past 12 months rose to the target's midpoint. In addition, indicators published in the past month point to continued economic growth at the relatively moderate pace of the past two years, which eased concerns of an additional slowdown in growth.
The Bank of Israel also notes that the IMF revised its global growth forecast downward, with apparent recovery in Japan and the UK, mixed macroeconomic data in the US, a recessionary environment continuing in Europe, and weakness persisting in emerging markets. The US Federal Reserve, the Bank of Japan, the European Central Bank, and the Bank of England will all continue expansionist policies. "Against the background of continued expansionary monetary policies in major economies, the shekel continued to appreciate in terms of the effective exchange rate, strengthening by 0.9% this month," it added.
As for the housing market, the Bank of Israel notes that new mortgages continue to stay high, but that it was premature to say whether the 0.1% drop in housing prices in April-May, reported by the Central Bureau of Statistics, was a change in trend.
Published by Globes [online], Israel business news - www.globes-online.com - on July 29, 2013
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