Israel Monetary Policy April 2017


Israel: Bank of Israel holds policy rate steady in April

April 6, 2017

At its 6 April monetary policy meeting, the Bank of Israel (BoI) left the policy rate unchanged at 0.10%, in line with market analysts’ expectations. The rate has been held at 0.10% since February 2015 in a bid to lift inflation.

Inflation climbed up recently and reached 0.4% in February, but remains well below the target range of 1.0%-3.0%. A competitive economy and the strong shekel are offsetting the inflationary pressure emerging from higher commodity prices, wage gains and lax monetary policy. The economy continued to hum along at a broadly steady pace in the first quarter of the year. Against this backdrop, the Bank decided to stay put with its accommodative stance.

Looking ahead, the Central Bank’s staff estimate that inflation will stay below target this year and that the policy rate will remain unchanged for the rest of 2017. A tightening cycle will likely start in the first half of 2018. The next monetary policy decision will be published on 29 May.

FocusEconomics Consensus Forecast panelists see the monetary policy rate ending 2017 at 0.15%. For 2018, the panelists sees the policy rate ending the year at 0.81%.

Author: Marlène Rump, Senior Data Analyst

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