Israel: Bank of Israel keeps policy rate unchanged at 0.10%
May 25, 2015
At its 25 May monetary policy meeting, the Bank of Israel (BoI) decided to maintain the policy rate unchanged at 0.10%. The decision met market expectations. The Bank decided to keep the policy rate on hold last month as well.
The BoI commented that economic data from the first four months of the year show that the moderate growth that prevailed in the past two years continues. According to a preliminary estimate, in Q1, GDP grew by 2.5% in annual terms. Growth was led by an increase in private consumption and in exports. In addition, the Consumer Confidence Index compiled by the Central Bureau of Statistics has increased sharply in recent months. Conversely, the number of tourist arrivals was significantly lower compared to the same period of last year.
In April, consumer prices fell 0.5% annually. The Bank attributed the annual drop to lower energy prices as well as to a decrease in the housing component of the CPI. Looking forward, the BoI added that, “one-year inflation expectations from various sources remained around the lower bound of the inflation target range, and expectations for 2 years and for medium terms rose toward the midpoints of the target range.”
Author: Dirina Mançellari, Senior Economist