Israel: Bank of Israel leaves policy rate unchanged in May
May 29, 2017
The Bank of Israel (BoI) decided to leave the policy rate untouched at 0.10% at its 29 May monetary policy meeting. This decision was expected by market analysts. The rate has been held at 0.10% since February 2015 in an attempt to bring inflation within the Bank’s target rate of 1.0%-3.0%.
Although inflation increased in April and reached 0.7%, the rate is still below the target range. Lower inflationary pressures stemming from the continued appreciation of the shekel, increased economic competition in the economy and recent measures approved by the government’s fiscal policy are being offset by rising price pressures from increased nominal wages and strong economic activity. Against this backdrop of relatively balanced risks to the inflation outlook, the Bank decided to not change its current accommodative policy stance.
Since the last monetary policy meeting in April, inflation expectations in the short and medium term have increased. The Monetary Committee will continue its accommodative monetary policy until inflation reaches the target range. The next monetary policy meeting is scheduled for 10 June.
Author: Jan Lammersen, Economist