Israel: Bank of Israel leaves policy rate unchanged in August and ditches promise of future rate hikes
August 28, 2019
At its 28 August meeting, the Monetary Committee of the Bank of Israel (BoI) kept the key interest rate unchanged at 0.25%.
The Bank’s decision to stay put was driven by soft inflation, which is currently well below the Bank’s 1.0%–3.0% target. Moreover, the stronger shekel and rising global trade tensions also played a role in the BoI’s decision to keep monetary policy highly accommodative.
The Central Bank shifted its guidance significantly. In previous meetings, the Bank had been promising “gradual and cautious” tightening going forward. However, in light of recent inflation data and external downside risks to growth, the BoI declared: “the interest rate will not be increased for an extended period. Moreover, if necessary, the Committee will take additional steps toward making monetary policy even more accommodative.”
Author: Oliver Reynolds, Economist