Israel holds interest at 0.1%, keeps at near zero since cut last year

By Susanna Moon

Chicago, April 21 – The Bank of Israel said it again decided to hold its interest rate at 0.1% for April, where it has stayed for more than a year since the rate was cut by 15 basis points in March 2015. Before that, the bank last lowered the rate by 25 bps in August 2015 and by 25 bps in July 2014.

As with the most recent hold, the bank said the position is in line with the bank’s monetary policy, which looks to return the inflation rate to the price stability target of 1% to 3% per year and to support growth while maintaining financial stability.

The decision takes into consideration inflation developments, growth in Israel and the global economy as well as the exchange rate, according to a bank announcement.

Inflation expectations stabilized this month, after showing an uptick last month, and inflation remains low amid price reductions initiated by the government and low energy prices, the bank said.

“One-year inflation expectations remain below the target range, and expectations for the medium and long terms continue to be anchored within the target range,” the release said.

The Consumer Price Index for March fell by 0.2%, slightly more than the average of forecasters’ predictions for a drop of 0.1%.

Meanwhile, real economic activity points to growth at the moderate rate of recent years, and labor market data is positive.

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