The money supply increased by 2.5% in January, compared to December 1999. The aggregate rise in the past three months amounted to 11.5%.
The money supply (cash and current account deposits in banks) increased in January by 2.5% compared to December 1999, completing an aggregate rise of 11.5% within three months. This emerges from internal data reaching "Globes" today. Figures for January, however, are provisional, relating to the 25th of the month.
Total money supply as of January 25, 2000 reached NIS 26.49 billion, up 20% compared to NIS 22.15 billion in January 1999. This growth rate represents a significant departure from the rate derived from the 3%-4% inflation target plus the potential 4%-5% increase in GDP.
The sharp rise in the money supply for this period derives, inter alia, from the public's stocking up on cash for fear of the YK2 Bug. The increase in the money supply is also explained by the successive interest rate reductions that resulted in an increase in the total cash held by the public.
Since the beginning of 1999, the nominal interest rate has been reduced by an aggregate 3.2%, and is now at its lowest level since August 1998.
Published by Israel's Business Arena on 7 February, 2000