The Bank of Israel Monetary Committee announced that it kept the interest rate unchanged at 4.5%, as expected. This is the seventh time in a row that the Bank of Israel has left the interest rate unchanged, after reducing it from 4.75% in January.
The Bank of Israel said: “Given the continuation of the war, the Monetary Committee’s policy focuses on stabilizing markets and reducing uncertainty, in addition to stabilizing prices and supporting economic activity. The interest rate path will be determined according to the convergence of inflation.” To its goal, continued stability in financial markets, economic activity and fiscal policy.
There have been voices calling for interest rates to rise but with some seeing the end of the war in sight, and inflationary pressures easing, despite an expected rise in the next few months, the market has changed direction and is pricing in a rate cut later next year. year.
The Bank of Israel added, “The ongoing state of geopolitical uncertainty continues to pose difficulties for economic activity and delays the economy’s return to the level of activity that characterized it before the war.”
Regarding inflation, the Bank of Israel said, “Inflation in the past 12 months reached 3.5%, which is higher than the upper limit of the target, and is expected to rise in the coming months. Inflation expectations from various sources for one year and beyond are within the target range, in part.” upper.”
Regarding the shekel, the Bank of Israel continued: “Since the last interest rate decision, the shekel has appreciated by 0.9% against the US dollar, by 6.4% against the euro, and by 3.7% in terms of the nominal effective exchange rate.
“The economy grew by 3.8% year-on-year in the third quarter, but the negative gap compared to the trend line remains, mostly due to supply constraints. The latest indicators of economic activity present a mixed picture regarding the fourth quarter, with a slight decline and the labor market still… Relatively tough, despite some moderation in recent months
“In the housing market, the increase in house prices has subsided. However, restrictions on activity in the construction industry remain significant.”
Finally, the Bank of Israel stated the country’s high risk premium, “The economic risk premium, as measured by the spread of credit default swaps, decreased significantly over the period reviewed, although it remains very high compared to the pre-war period.”
Published by Globes, Israel Business News – en.globes.co.il – on November 25, 2024.
© Copyright Globes Publisher Itonut (1983) Ltd., 2024.
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