A survey conducted by "Bloomberg" found that 12 out of 16 economic experts expect Governor of the Bank of Israel Prof. Stanley Fischer to raise the interest rate for October by 25 basis points to 2%. The interest rate decision will be published tomorrow evening at 5.30 pm.

The Bank of Israel faces a dilemma. On the one hand, Fischer would like to restrain the sharp rise in the price of apartments by raising interest. On the other hand, raising interest will strengthen the shekel, which would harm the competitiveness of Israeli exporters.

Expectations of an interest rate hike have strengthened the shekel in recent days with the shekel dollar representative exchange rate falling below NIS 3.7/$ for the first time in five months. Part of this strengthening reflects the weakening of the dollar on global markets.

Published by Globes, Israel business news - www.globes-online.com - on September 26, 2010

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