Israel holds rate steady at 0¼% amid falling inflation, weaker shekel

By Susanna Moon

Chicago, Nov. 24 – The Bank of Israel decided to keep its interest rate unchanged at 0¼% for December.

The move is consistent with the bank’s monetary policy of returning the inflation rate to within the price stability target of 1% to 3% a year over the next 12 months and to support growth while maintaining financial stability, according to a news release.

The Consumer Price Index for October fell by 0.3%, led by a rise of 0.7% in prices of tradable goods. The inflation rate as measured over the previous 12 months stayed at negative 0.3%.

This month, the drop continued in short- and medium-term inflation expectations, which apparently incorporate the expected one-off effect of a reduction in electricity and water prices in January.

The shekel weakened by 1.1% against the dollar this month and appreciated by 0.2% in terms of the nominal effective exchange rate.

Meanwhile, falling oil prices will help reduce global inflation and support economic recovery, the bank said.

The bank last cut the rate by 25 basis points in August and by 25 bps in July.

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