Bank of Israel holds rates on economic uncertainty, low inflation
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The Bank of Israel left its benchmark interest rate (ILINR=ECI) at 0.1% for a 14th straight policy meeting on Monday, citing low inflation and economic uncertainty in the wake of a jump in COVID-19 infections.
“The Israeli economy’s process of recovery from the crisis continues. However, there are still challenges to economic activity,” the central bank said in a statement, noting it planned to continue to “conduct an accommodative monetary policy for a prolonged time.”
Growth was an estimated 6.5% in 2021 and the bank’s own economists project a 5.5% pace this year and 5% in 2023. With the strong shekel helping to keep import prices down, inflation is forecast at 1.6% in the coming year — down from a 2.4% annual rate in November and below the midpoint of the government’s 1%-3% annual target range.
All 12 economists polled by Reuters had said they expected the monetary policy committee to keep rates steady, as it has since cutting them from 0.25% at the outset of the pandemic. The next change is widely expected to be a rate increase later this year or in 2023.
The Bank of Israel’s staff forecast the benchmark rate at 0.1% to 0.25% in the next year.
Israel’s economy has rebounded on the heels of a rapid COVID-19 vaccination roll-out in which 46% of Israelis have received a third, booster shot. The country remains largely free of virus-related restrictions, although infections have been soaring in recent weeks.
SOURCE: REUTERS
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