Israel: Bank of Israel keeps policy rate unchanged at 0.10% in May
May 23, 2016
At its 23 May monetary policy meeting, the Bank of Israel (BoI) decided to leave the policy rate unchanged at 0.10%. The decision met market expectations. This is the thirteenth consecutive meeting in which the Bank has decided to keep the policy rate on hold.
The BoI commented that preliminary GDP figures show that the economy decelerated in the first quarter. Growth was supported by robust domestic demand, in particular by an acceleration in private consumption. The labor market remained robust and the latest Labor Force Survey shows that the unemployment rate inched down in April. The Bank also commented that the currency had depreciated 3.0% against the USD since the previous meeting in April.
Regarding consumer prices, the Bank stated that the annual variation in consumer prices remains well below its inflation target range of 1.0% to 3.0% amid lower prices for furniture and household equipment. Moreover, the Bank provided guidance to the markets and added that, “the intensifying decline in exports in recent months reinforces the Monetary Committee’s assessment that in view of developments in the inflation environment, in growth in Israel and in the global economy, in the exchange rate, as well as in monetary policies of major central banks, monetary policy will remain accommodative for a considerable time.”
Author: Dirina Mançellari, Senior Economist