Israel Monetary Policy


Israel: Bank of Israel keeps policy rate unchanged at 0.25%

January 26, 2015

At its 26 January monetary policy meeting, the Bank of Israel (BoI) decided to keep the policy rate unchanged at 0.25%. This is the fifth consecutive meeting in which the Bank has stayed put having determined that the current level of the interest rate supports the continuation of the recovery in economic activity and the return of inflation to within the target range.

On the domestic economy, the Bank commented that the latest economic data point to an acceleration of economic activity in the last quarter of 2014 following a slowdown in Q3. In addition, growth in exports and imports picked up and production in all industries increased with a notable improvement seen in low-technology industries. The labor market remained robust in the final quarter of the year. The Bank added that the increase in the number of employed was more prominent in the services industry than in manufacturing.

Regarding consumer prices, the BoI said that lower prices for fresh food, clothing and energy drove inflation into negative territory in 2014. The Central Bank added that, “inflation expectations for short terms are below the lower bound of the target range, among other things against the background of continued declines in energy prices around the world and the expected effect of the reductions in water and electricity prices.”

FocusEconomics Consensus Forecast panelists expect the base rate to end 2015 at 0.68%. For 2016, panelists see the policy rate ending the year at 1.69%.

Author:, Senior Economist

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Israel Monetary Policy Chart

Israel Monetary Policy January 2015

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

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