Israel Monetary Policy


Israel: Bank of Israel decides not to change policy rate at latest meeting

March 23, 2015

At its 23 March monetary policy meeting, the Bank of Israel (BoI) decided to maintain the policy rate unchanged at 0.10%. The decision met market expectations. Last month, the Bank cut the policy rate by 15 basis points from 0.25% to 0.10% in order to bring the inflation rate within the target range.

The BoI commented that in the first quarter of the year, economic activity indicators paint a mixed picture of the economy. Foreign trade data indicate that exports remain weak. A slight recovery was recorded in tourism, however, the numbers of tourist arrivals remains significantly lower than in the corresponding period last year. On the other hand, data from the labor market point to a continued improvement. Labor Force Survey data for January show that the unemployment rate inched down by 0.1 percentage points and that real wages increased in seasonally-adjusted terms.

In February, consumer prices fell 0.7% over the same month last year. The Bank attributed the annual drop in consumer prices to lower electricity and energy prices as well as to a seasonal decline in prices for clothing and footwear. The Monetary Committee said that the decision to keep the policy rate at 0.10%, “is intended to return the inflation rate to within the price stability target of 1-3 percent a year over the next twelve months, and to support growth while maintaining financial stability.”

FocusEconomics Consensus Forecast panelists expect the base rate to end 2015 at 0.68%. For 2016, panelists see the policy rate ending the year at 1.69%.

Author:, Senior Economist

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Israel Monetary Policy Chart

Israel Monetary Policy March 2015

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

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