Bank of Israel keeps interest rate unchanged

In explaining its decision, the Bank of Israel said that the shekel's appreciation had been halted over the past month.

After lowering the interest rate by 25 basis points last month, the Bank of Israel Monetary Committee has kept the rate for November unchanged at 1%, in line with expectations.

The Bank of Israel said that the decision to keep the interest rate for November 2013 unchanged at 1% is consistent with its monetary policy, which is intended to entrench the inflation rate within the price stability target of 13% a year over the next twelve months, and to support growth while maintaining financial stability.

The Bank of Israel added that the path of the interest rate in the future depends on developments in the inflation environment, growth in Israel and in the global economy, the monetary policies of major central banks, and developments in the exchange rate of the shekel.

Listing its main considerations in keeping the interest rate at 1% the Bank of Israel said that, "a decline in the number of housing transactions continues, alongside the continued increase in home prices, and the high volume of new mortgages taken out. Guidelines published by the Supervisor of Banks, which limit the share of repayment out of income, the share of the loan which may be granted at variable rate interest, and the term until final loan repayment, are expected to reduce the risk to mortgage borrowers and the banking system."

The Bank of Israel also observed that in October, "the appreciation trend of the shekel halted, and the shekel weakened by 1.5% in terms of the effective exchange rate. The shekel weakened by 0.7% against the dollar, while most currencies strengthened against the dollar.

Published by Globes [online], Israel business news - - on October 28, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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