Goldman Sachs sees the Bank of Israel lowering the interest rate tomorrow.
Last month the Bank of Israel lowered the interest rate by 25 basis points from 0.5% to a historic low of 0.25%. Even so Goldman Sachs analysts in an economic survey published today ahead of the October interest rate decision, see the Bank of Israel lowering the interest rate by a further 0.1% to 0.15%, and predict that before the end of 2014, it will cut the rate by a further 0.1% to 0.05%.
The ongoing cuts, says Goldman Sachs, are due to the slowdown in the Israeli economy, virtually zero inflation (with expected negative inflation next month) and the cooling off in the real estate market.
However, Psagot chief economist Ori Greenfeld says there is only a 25% chance of the interest rate being cut by 0.1%. Leader Capiital Markets macroeconomist Yonatan Katz believes there will be "stability in the interest rate tomorrow but the announcement may talk about additional measures if they are required."
Published by Globes [online], Israel business news - www.globes-online.com - on September 21, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014
Karnit Flug picture: Eyal Yitzhar