Bank of Israel Research Department director Dr. Karnit Flug said that the central bank will soon raise its growth forecast for 2010, and she also expects that interest rates will continue to rise in 2010.

She said, "The IMF expects global GDP to grow 3%, and world trade to grow 2.5%. In the Bank of Israel's forecasts we assume that world trade will grow 4.5% and my guess is that our next update will be higher than that. Company surveys that we have carried out show us that the recovery is gathering steam."

On interest rates she said, "When we lowered the interest rate sharply to 0.5% our belief was that we were going into 'the mother of all recessions.' But at this stage, it is clear that we have not reached such a point and there has been a gradual process of returning to policies appropriate for the present conditions. Our interest rate is still relatively low."

Published by Globes [online], Israel business news - www.globes-online.com - on December 30, 2009

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