Israel again keeps rate at 0.1%; inflation ticks up by 0.2% for May

By Tali Rackner

Norfolk, Va., June 22 – The Bank of Israel said it will again hold the interest rate steady at 0.1% for July. The bank last lowered the rate by 15 basis points for March.

The move is in line with the bank’s monetary policy, which aims to return the inflation rate to within the price stability target of 1% to 3% per year over the next 12 months and to support growth while maintaining financial stability, according to a press release.

The consumer price index rose by 0.2% for May, in line with the average of forecasters’ projections.

The change in the CPI over the past 12 months was negative 0.4%, compared with negative 0.5% over the 12 months that ended in April. From March to May, the increase in the index returned to a pace consistent with achieving the inflation target, and it seems that the price declines from January to February were one-off occurrences, the bank said.

Meanwhile, one-year inflation expectations from various sources remained around the lower bound of the inflation target range, the bank said.

From May 22 through June 19, the shekel strengthened by about 1% against the dollar and weakened by about 0.3% against the euro. The shekel strengthened by about 1% in terms of the nominal effective exchange rate.

The minutes of the monetary discussions prior to the interest-rate decision for July will be published on July 6. The decision regarding the interest rate for August will be published on July 27.

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