Israel Monetary Policy April 2019

Israel: Bank of Israel leaves policy rate unchanged in April

At its 8 April meeting, the Monetary Committee of the Bank of Israel (BoI) kept the interest rate unchanged at 0.25%, as had been widely expected by market analysts.

The Bank’s decision was chiefly driven by mild price pressures, with inflation tracking close to the lower bound of the 1.0%–3.0% target range in recent months. Moreover, the Bank noted that the shekel had appreciated since its last meeting in February. If this trend continues, it could frustrate the Bank’s efforts to boost inflation. In addition, external conditions have become less favorable due to slowdowns in advanced economies, while many major central banks have paused their tightening cycles, giving the BoI less of an incentive to hike.

The Committee maintained a dovish tone in April, highlighting that future tightening would be “gradual and cautious” in order to ensure inflation stabilizes around the midpoint of the target range. Our panelists continue to see at least one further rate hike this year.

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