The Bank of Israel Monetary Committee, headed by Governor Prof. Amir Yaron, has left the interest rate unchanged at 0.1%, after cutting it from 0.25% last month.
At the same time the Bank of Israel's research department has updated its forecast. It expects GDP to contract by 4.5% in 2020, compared with 5.3% in the April forecast, and to grow by 6.8% in 2021, compared with 8.7% in the April forecast. The inflation rate in 2020 is expected to be -0.5% (compared with -0.8% in the April forecast), and in 2021, it is expected to total 0.7% (compared with 0.9% in the April forecast).
On its interest rate decision, the Bank of Israel said, "The coronavirus crisis has led to an unprecedented contraction in the scope of economic activity and to a steep increase in the number of jobseekers. The gradual process of removing the restrictions that the government imposed on movement and activity is beginning to be reflected in economic activity, though the adverse impact on the economy is still considerable and is expected to persist."
The Bank of Israel expects the interest rate in a year (the second quarter of 2021) to be in the 0-0.1% range.
Published by Globes, Israel business news - en.globes.co.il - on May 25, 2020
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