A Bank of Israel model predicts that the shekel-dollar exchange rate will be a range of NIS 4-4.02/$ during the second half of 2009, and that there will be a gradual increase in the interest rate to an average rate of 0.7% in the next four quarters. The prediction appears in the minutes of the monetary forum's discussions of the interest rate for July, published today.
At the Bank of Israel's most recent meeting, it kept the interest rate at the all-time low of 0.5%.
The Bank of Israel expects inflation to be 2.4% in 2009 and 1% in 2010. Although it expects prices to rise in the coming months, due to increases in VAT and in government-supervised prices, it expects that inflation in the next twelve months will be within the target range. The central bank adds that the "current economic situation provides support for keeping the interest rate at its low level in the next few months."
The Bank of Israel's scenarios, based on econometric models, assume that that GDP will contract by 1.5% in 2009, the low interest rates around the world will start to increase in 2010, prices of imported inputs will increase from the second quarter of 2009, and world trade will contract by 11% in 2009 and then remain unchanged in 2010.
Published by Globes [online], Israel business news - www.globes-online.com - on July 6, 2009
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