Israel Monetary Policy November 2017


Israel: Bank of Israel stands pat in November on below-target inflation

November 27, 2017

On 27 November, the Bank of Israel decided to leave the interest rate unchanged at 0.10%, citing persistently low inflationary pressures. November’s decision was unanimously expected by market analysts, and the rate has now gone unchanged for 30 consecutive monetary policy meetings. It was last cut in February 2015.

Near-zero inflation left the Bank with little room to maneuver. Despite increasing recently, inflation was far from the Bank’s 1.0% to 3.0% target. Encouragingly, however, October’s uptick to 0.2% was not due to the overheated property market, which experienced a further cool-off in the month. Furthermore, the stabilization of the exchange rate in October somewhat eased downward pressure on prices. November’s rate hold also came amid strong national accounts data for Q3. That said, GDP growth was consistent with potential, leaving the economic outlook broadly unchanged since the Monetary Committee last met in October and giving the Bank few options other than to hold fire.

In its final monetary policy meeting of the year, the Bank reaffirmed its commitment to loose monetary policy as it grappled with the low inflation environment. Moreover, it signaled that its accommodative stance would persist until inflation returned to within the target range. Expecting inflation to remain low into next year, neither the Bank nor FocusEconomics Consensus Forecast panelists forecast the long-awaited tightening cycle to begin before Q3 2018. That said, most panelists expect at least one rate hike by the end of 2018.

The Bank’s first monetary policy meeting of 2018 is scheduled for 10 January.

FocusEconomics Consensus Forecast panelists see the interest rate ending 2018 at 0.10%. For 2019, our panelists see the interest rate ending the year at 0.47% as inflation gradually returns to within the Bank’s target range.

Author:, Economist

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Israel Monetary Policy Chart

Israel Monetary Policy November 2017

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

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