"Inflation will likely return to within the target range only in 2010."
The Bank of Israel predicts that inflation in the first half of 2009 will be less than 1%, and could even be negative. The central bank cited the worsening economic climate and the collapse of energy and commodities prices. "Inflation will likely return to within the target range only in 2010," it adds.
The Bank of Israel today published its Inflation Report for the fourth quarter of 2008, a day after Governor of the Bank of Israel Prof. Stanley Fischer cut the interest rate to an unprecedented 1% and just days after the Central Bureau of Statistics announced that the Consumer Price Index (CPI) rose by 3.9% in 2008, above the 1-3% inflation target.
The Bank of Israel says that things could get worse, possibly significantly worse. However, "There are also assessments of a turnaround in the global environment in the second half of the year." If this happens, the slowdown in Israel's economic activity could be modest compared with other countries.
Published by Globes [online], Israel business news - www.globes-online.com - on January 27, 2009
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