The Bank of Israel now expects the slowdown in US growth to continue through 2009.
Minutes of the recent meeting of Bank of Israel monetary policy committee in late March show a near total consensus on Governor of the Bank Stanley Fischer's decision to make a further 50-basis point cut in the interest rate at the end of March, bringing the total cut to one percentage within two months.
"One of the members of the committee participating in the discussion recommended reducing the interest month for the month of April by 25 basis points. Four members of the committee recommended reducing the rate of interest for April by 25 basis points. These members of the committee stated that they attribute great weight to the expected effect of the global slowdown on the Israeli economy," said the minutes. In the previous meeting in late February, three members supported a 25 basis point cut and just two were in favor of a cut of 50 basis points.
The meeting also noted that "During the past month, the expectation has strengthened that the slowdown in economic growth in the US will continue into 2009, which will affect other economies worldwide. On the other hand, the sharp increases in energy and commodity prices worldwide have increased fears of inflationary pressures."
Published by Globes [online], Israel business news - www.globes-online.com - on April 7, 2008
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