Israel: Bank of Israel keeps policy rate on hold in January
January 24, 2016
At its 24 January monetary policy meeting, the Bank of Israel (BoI) decided to leave the policy rate unchanged at 0.10% as markets had expected. This is the ninth consecutive meeting in which the Bank has decided to keep the policy rate on hold.
The BoI commented that the economy grew at a steady rate in the fourth quarter, thus following the 2.4% expansion tallied in the third quarter. Growth was broadly supported by robust domestic demand. However, the escalation of violence in the country is negatively affecting tourism. Regarding the labor market, the BoI added that the unemployment rate is low and that the job vacancy rate is high.
In December, consumer prices fell 1.0% annually, which was down from the 0.9% drop seen in the previous month. As a result, the annual variation in consumer prices remains well below the Central Bank’s inflation target range of 1.0% to 3.0%. The Bank added that, “short- and medium-term inflation expectations declined this month, against the background of the continued decline in oil and commodity prices and the initiated price reductions.”
Author: Dirina Mançellari, Senior Economist