The Bank of Israel Monetary Committee confounded expectations today by leaving the interest rate unchanged at 0.25%. In explaining its action, the Bank of Israel cited mixed data: a decline in the annual inflation rate and the strength of the shekel against other currencies on the one hand, and high growth figures and a 40-year low in unemployment on the other. Before the decision, the market expected that the interest rate would be cut to 0.1%.
The shekel strengthened against the basket of currencies on the news , with the shekel-euro exchange rate down 0.12% to NIS 3.80/€ and the shekel-dollar exchange rate down 0.14% to NIS 3.455/$.
"The Monetary Committee's assessment is that in view of the inflation environment in Israel, the monetary policies of major central banks, the slowing in the global economy, and the continued appreciation of the shekel, it will be necessary to leave the interest rate at its current level for a prolonged period or to reduce it in order to support a process at the end of which inflation will stabilize around the midpoint of the target range, and so that the economy will continue to grow strongly," the Monetary Committee's announcement read. "Furthermore, the Committee is taking additional steps as necessary to make monetary policy more accommodative. The Bank of Israel continues to monitor developments in inflation, the real economy, fiscal policy, the financial markets, and the global economy, and will act to attain the monetary policy targets in accordance with such developments."
Published by Globes, Israel business news - en.globes.co.il - on November 25, 2019
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