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Bank of Israel maintains interest rate unchanged at ¾% as CPI shrinks
By Jennifer Chiou
New York, March 24 - The Bank of Israel said it has decided to keep the interest rate for April unchanged at ¾%. This follows a 25 basis points reduction last month.
According to a bank news release, the decision is consistent with the bank's monetary policy, which is intended to entrench the inflation rate within the price stability target of 1% to 3% a year over the next 12 months, and to support growth while maintaining financial stability.
The bank stated that the CPI for February declined by 0.2%, adding that this inflation environment is within the bottom portion of the target range, and it is likely that over the next several months, inflation over the preceding 12 months will decline temporarily to below the target range.
Inflation is, however, expected to return to within the target toward the beginning of 2015. Inflation expectations for one year ahead are within the target range, below the midpoint of the inflation target, the bank noted.
The release also said that data continue to indicate moderate economic growth, and some recovery in the growth rate is seen in the first quarter of 2014. In particular, a recovery in private consumption is apparent, as well as some increase in exports, which is focused for now on high tech and business services industries.
In the past month, the shekel appreciated by 1% in terms of the nominal effective exchange rate, the bank said.
Further, there is a renewed trend of growth in world trade, and the global economy is expected to continue to grow moderately, the release stated.
The pace of home price appreciation moderated this month, the bank added.
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