Analysts see no change in Bank of Israel interest rate

Amir Yaron  photo: Rafi Kutz

Leader Capital Markets: It's hard to believe that only three months ago the Bank of Israel predicted an interest rate hike in the third quarter this year and two in 2020.

Tomorrow (Monday) the Bank of Israel is due to announce an interest rate decision, and most market analysts are agreed that the bank will not change its key lending rate. Analysts at Leader Capital Markets write that tomorrow's announcement can be expected to mention stable growth in the third quarter and the tight labor market, but also that inflation is off target, the shekel has strengthened, and global risks have risen.

"It's hard to believe that only three months ago the Bank of Israel predicted an interest rate hike in the third quarter of this year, and two further hikes in 2020," Leader Capital Market's review states. "The Bank of Israel forecast inflation of 1.6% this year and 1.6% in 2020. We have stressed in the past that although these forecasts are from the Bank of Israel Research Department, they nevertheless receive the imprimatur of the Monetary Committee."

Leader's analysts believe that the Bank of Israel's economic growth forecast will be revised downwards in the light of the worsening global economic environment, but that growth will still be over 3% in both 2019 and 2020. "The interest rate forecast will probably be updated to no-change in 2019 and one rise in 2020, in the fourth quarter. The inflation forecast will be updated to 0.8% in 2019 and 1.5% in 2020," Leader's review states.

Published by Globes, Israel business news - en.globes.co.il - on October 6, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Amir Yaron  photo: Rafi Kutz
Amir Yaron photo: Rafi Kutz
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