Governor of the Bank of Israel Amir Yaron said in an interview with CNBC at the World Economic Forum in Davos yesterday that inflation in Israel was "still above our target, which is between 1% and 3%."
"We expect inflation in the first half of the year to go up, partly because of taxes, and partly because, as recovery is happening, we're seeing demand moving faster than supply constraints," Yaron said. On the possibility of lower interest rates, Yaron said, "In the second half, we are hoping inflation will come into balance, moderate itself. We are seeing one or two cuts feasible in the second half of the year, as inflation is supposed to go into the target."
Yaron said that he expected to see GDP growth of 4% in Israel in 2025 and 4.5% in 2026, after estimated growth of just 0.6% in 2024, as long as there is no further military escalation.
"I hope the ceasefire is a turning point away from the 7th of October, that horrible day," Yaron said. "All the trouble that we’ve seen, people see on both sides ... I think if it has a lasting effect, it should pave the way to regional arrangements that, you know, facilitate rehabilitation and, importantly, sustainable security. That will provide economic growth, that will obviously help the Israeli economy, but not just the Israeli economy - I think it will help the region as a whole."
Published by Globes, Israel business news - en.globes.co.il - on January 22, 2025.
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