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

By Tali Rackner

Norfolk, Va., Aug. 24 – The Bank of Israel said it will again hold the interest rate steady at 0.1% for September. 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% a year over the next 12 months and to support growth while maintaining financial stability, according to a press release.

The Consumer Price Index increased by 0.2% for July, similar to the average of forecasters’ projections.

The rate of inflation as measured by the change in the CPI over the past 12 months was negative 0.3%, compared with negative 0.4% over the 12 months that ended in June. The rate of increase in the CPI in recent months has been consistent with achieving the inflation target, but the decline in energy and commodity prices that resumed in the past two months is expected to delay the return of the inflation rate to within the target range.

Short-term inflation expectations from various sources recorded a sharp decline this month, the bank said.

From July 26 through Aug. 21, the shekel weakened by around 1.3% against the dollar and about 4.2% against the euro. The shekel weakened by about 1.3% in terms of the nominal effective exchange rate, but it appreciated by 5.8% for the year to date.

The minutes of the monetary discussions prior to the interest-rate decision for September will be published on Sept. 7. The decision regarding the interest rate for October will be published on Sept. 24.

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