BoI keeps rate unchanged, economy to shrink 4.5% in 2020

Amir Yaron  / Photo: Rafi Kotz, Globes

The Bank of Israel sees Israel's economy contracting 5% in 2020, if there is a drawback in removing restrictions.

The Bank of Israel Monetary Committee, headed by Governor Amir Yaron, has kept the interest rate unchanged at 0.1%, as expected. In contrast to last month when the Monetary Committee increased its program to purchase government bonds from NIS 50 billion to NIS 85 billion and allocated NIS 10 billion for loans to banks, there were no quantitative easement measures this month.

In discussing the state of the economy, the Bank of Israel struck a cautiously optimistic note. "The economy is in a prolonged exit process from the second lockdown, but there is uncertainty regarding the continuation of the exit from the lockdown in view of the apparent increase in morbidity. News from abroad regarding progress in vaccine development is positive, but in the meantime, it is unclear when the vaccines will be distributed in Israel and abroad. Until then, morbidity is expected to continue affecting economic activity."

The Bank of Israel Research Department sees Israel's economy contracting 4.5% in 2020, "If there is no significant drawback in removing (lockdown) restrictions," and 5%, if there is a drawback.

The Bank of Israel sees the Israeli economy growing 5.4% in 2021, slightly higher than the Ministry of Finance's forecast of 5% growth next year.

Published by Globes, Israel business news - - on November 30, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Amir Yaron  / Photo: Rafi Kotz, Globes
Amir Yaron / Photo: Rafi Kotz, Globes
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