The Bank of Israel Monetary Committee has kept the interest rate for October unchanged at 2.25%.
The Bank of Israel cited the unexpected 1% rise in the Consumer Price Index (CPI) for August, the revised growth forecasts, which indicate that growth is continuing at a pace similar to the first half of the year, stable home prices during September, and qualitative easing programs by leading central banks in the world, as the reasons for keeping the interest rate unchanged. This is the third consecutive month that the Bank of Israel has kept the rate at 2.25% after lowering it from 2.5%.
The Bank of Israel said that although the CPI for August, showed that inflation for the 12 preceding months rose to 1.9% from 1.4%, due to tax hikes and rising prices for oil and other commodities, 12-month inflation expectations are stable. The Bank of Israel's Research Department revised its growth forecast upwards to 3.3% for 2012 from 3.1% previously but lowered its 2013 forecast to 3% from 3.4% due to the problems in Europe.
Although home prices were stable in September, compared with the corresponding month of 2011, the Bank of Israel warns, "the change in home prices in the past month, the number of home purchase transactions, and new mortgages granted are a cause for concern over the possibility of renewed increases in home prices."
The Bank of Israel also warns, "The level of economic risk from around the world remains high, and with it the concerns over negative effects on the local economy. Real economic data around the world continue to indicate weakness. Assessments are that the debt crisis will continue to be a major risk."
Published by Globes [online], Israel business news - www.globes-online.com - on September 24, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012