Israel Monetary Policy August 2017

Israel

Israel: Bank of Israel keeps policy rate steady in August as inflation remains below target

August 29, 2017

The Bank of Israel kept the policy rate at 0.10% at its 29 August meeting, a decision that did not come as a surprise to market analysts. The rate has not been changed since February 2015 in an attempt to boost inflation.

The decision came following recent months’ sub-zero readings in annual consumer price changes, which are far below the Bank’s target of increases between 1.0% and 3.0%. The Bank does not, however, consider these recent decreases to be reflective of demand conditions. With rising nominal wages and a weakening exchange rate, it notes that annual consumer price changes are projected to be in positive territory from the short-term onwards.

Going forward, the Bank restated its commitment to keeping an accommodative monetary policy stance in order to entrench inflation within the target range. As FocusEconomics panelists expect inflation to remain below target for the remainder of the year, they also foresee the policy rate being left unchanged.

The next monetary policy meeting is scheduled for 19 October.

FocusEconomics Consensus Forecast panelists see the monetary policy rate ending 2017 at 0.10%. For 2018, however, the panelists see the policy rate ending the year at 0.47% as they expect inflation will return to within the Bank’s target range.


Author:, Economist

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Israel Monetary Policy Chart


Israel Monetary Policy August 2017

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


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