Merrill Lynch sees inflation falling rapidly

Merrill Lynch economist Riccardo Barbieri writes that monetary policy continues to ease around the world even as economic indicators continue to improve. Pointing to improved consumer confidence, he says that despite all the headwinds facing the US economy, "We believe that prospects for recovery in the second half of the year are improving."

Barbieri sees Israel's Consumer Price Index (CPI) rising 0.7% in April. That will bring year over year inflation to 2.8%, and he sees annual CPI figures continuing to drop rapidly after April's report. For the full year of 2009, Merrill Lynch sees an inflation rate of 1.1%, and a rate of 1.5% for 2010.

Merrill Lynch Research sees Israeli GDP shrinking 2% in 2009, and growing 1.8% in 2010.

Merrill Lynch also sees Bank of Israel interest rates, currently at 0.5%, bottoming out at 0.25%.

Merrill Lynch was bought by Bank of America in 2008 and is now a wholly-owned subsidiary of the bank.

Published by Globes [online], Israel business news - www.globes-online.com - on May 11, 2009