The Bank of Israel Monetary Committee, headed by Governor Dr. Karnit Flug, has kept the interest rate for December unchanged at its historic low of 0.1%. The interest rate has been unchanged since March 2015 and the Bank of Israel's Research Department does not expect a rate hike until the third quarter of 2018 because of low inflation.
The Bank of Israel said, "In recent months, there has been a slight increase in the inflation environment, though it remains below the target (of between 1% and 3%). Annual inflation increased, and short-term expectations rose slightly. Long-term expectations are anchored within the target range."
The Bank of Israel added, "The economy continues to expand at a pace that is consistent with its potential growth. However, the first estimate of third quarter National Accounts shows a halt in the recovery of exports, due to a decline in goods exports, while private consumption returned to being the main component of growth. All indicators from the labor market continue to point toward its strength, and to show that it hovers around full employment. "
On the shekel, the Bank of Israel said, "The exchange rate has stabilized since the last monetary discussion. In the past 12 months, the shekel has appreciated by 5% in effective exchange rate terms."
On housing prices, the Bank of Israel concluded, "Housing market data continue to indicate some slowdown in activity, with the continued increase in home prices at a relatively moderate rate."
Published by Globes [online], Israel business news - www.globes-online.com - on November 27, 2017
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