Bank of Israel leaves interest rate unchanged

Karnit Flug

The central bank says interest rate policy will continue to be accommodative in order to bring inflation to within the target range.

As widely expected, the Bank of Israel Monetary Committee has decided to keep the bank's interest rate unchanged, at 0.1%.

In its announcement, the Bank of Israel inflation continues to be moderate, and that is mainly affected by changes in energy prices. "Medium term (forward) inflation expectations are anchored within the target range, and longer-term expectations are around the midpoint of the target range." The announcement says. The inflation target range set by the government is 1-3% annually.

The bank assesses that, net of the atypical effect of vehicle imports, the economy continued to grow in the first quarter of 2017 by a rate similar to that in recent quarters, and that the labor market continues to convey a very positive picture and is near full employment.

On housing, the banks says "There are signs of the housing market cooling off, but it is too early to conclude that the trend of increases has halted." As for the outlook, the announcement states, "The Monetary Committee intends to maintain the accommodative policy as long as necessary in order to entrench the inflation environment within the target range."

Published by Globes [online], Israel business news - www.globes-online.com - on April 6, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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