Bank of Israel keeps benchmark interest rate at 2¼% for September

By Tali David

Minneapolis, Aug. 27 - The Bank of Israel announced that it will maintain its benchmark interest rate at 2¼% for September.

As previously reported, the rate was cut by 25 basis points in July, but remained steady in August.

According to a bank press release, the Consumer Price Index increased by 0.1% in July, in line with forecasts and below the seasonal path consistent with achieving the inflation target.

The rate of inflation over the previous 12 months was 1.4%, compared with 1% the previous month. On a seasonally adjusted basis, inflation since the beginning of the year has been 0.9% in annual terms.

Forecasts of the inflation rate over the next 12 months increased this month, ranging from 2.3% to 2.6%, compared with 1.6% to 2% in the previous month.

According to the statement, prices are expected to increase by 1.3% over the next three months. Inflation expectations for two years and longer increased slightly, currently ranging between 2.3% and 2.4%.

Half of the forecasters predict that the Bank of Israel interest rate for September will be unchanged, but that the interest rate will be reduced by 0.25 percentage points in the next three months. The other half the forecasters expect the interest rate to be reduced by 0.25 percentage points this month.

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