Israel Monetary Policy March 2016


Bank of Israel keeps policy rate unchanged at 0.10% in May

At its 23 May monetary policy meeting, the Bank of Israel (BoI) decided to leave the policy rate unchanged at 0.10%. The decision met market expectations. This is the thirteenth consecutive meeting in which the Bank has decided to keep the policy rate on hold.

The BoI commented that preliminary GDP figures show that the economy decelerated in the first quarter. Growth was supported by robust domestic demand, in particular by an acceleration in private consumption. The labor market remained robust and the latest Labor Force Survey shows that the unemployment rate inched down in April. The Bank also commented that the currency had depreciated 3.0% against the USD since the previous meeting in April.

Regarding consumer prices, the Bank stated that the annual variation in consumer prices remains well below its inflation target range of 1.0% to 3.0% amid lower prices for furniture and household equipment. Moreover, the Bank provided guidance to the markets and added that, “the intensifying decline in exports in recent months reinforces the Monetary Committee’s assessment that in view of developments in the inflation environment, in growth in Israel and in the global economy, in the exchange rate, as well as in monetary policies of major central banks, monetary policy will remain accommodative for a considerable time.”

FocusEconomics Consensus Forecast panelists expect the base rate to end 2016 at 0.47%. For 2017, panelists see the policy rate ending the year at 1.29%.

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Israel Monetary Policy Chart

Israel Monetary Policy May 2016

Note: Policy Rate in %.
Source: Bank of Israel (BoI).

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