The Bank of Israel is keeping its lending rate at 0.1%. In explaining today's decision, the Monetary Committee stated that the inflation environment in Israel remains very low, below the government's target range of 1-3%. "Short-term expectations are below the target range, while long-term expectations are anchored within the range," the Committee's statement said.
"Indicators of real economic activity support the assessment that the economy will continue growing at a rate that is in line with potential growth, after some slowdown in the first half of the year. The economy is apparently returning to more balanced growth in terms of the composition of uses," the statement continued.
On the exchange rate, the Committee notes that the appreciation of the shekel has resumed, and that since the last monetary policy discussion it had strengthened by about 3%. The Committee also notes that the rise increase in home prices in Israel has resumed, but adds this is at a more moderate rate than in the past, and that "Most indicators point to a slowdown in activity in the housing market."
Bank of Israel Research Department figures presented to the Committee indicate that Israel's GDP will rise by 3.1% in 2017 and by 3.3% in 2018, with inflation in the year ending in the third quarter of 2018 expected to be 1.0%. The Research Department sees the Bank of Israel's interest rate remaining at its current level of 0.1 percent until the third quarter of 2018, and thereafter rising to 0.25 percent in the fourth quarter of 2018.
Published by Globes [online], Israel business news - www.globes-online.com - on October 19, 2017
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