No surprises this month from Bank of Israel Governor Dr. Karnit Flug as the Monetary Committee has decided to keep the interest rate for December unchanged at 1%, in line with expectations. The Bank of Israel kept the rate unchanged last month too after lowering the rate by 25 basis points in October.
The Bank of Israel said that the decision to keep the interest rate for December 2013 unchanged at 1% was due to the inflation environment remaining low and the weakness in the third quarter growth rate.
On the shekel exchange rate the bank said, "Over the month since the previous interest rate decision, the shekel weakened by about 0.9% against the dollar, but the shekel’s weakness was more moderate than that of most currencies against the dollar. The shekel strengthened by about 0.5% against the effective exchange rate."
On housing prices the bank said, "The increase in housing prices continues, along with a rapid pace 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."
Published by Globes [online], Israel business news - www.globes-online.com - on November 25, 2013
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