The Bank of Israel on Monday decided not to raise its key interest rate for July, following 10 consecutive months of increasing it.
In a statement, the Bank cited moderation in Israel’s inflation as its primary reason to keep the rate at 4.75 percent: “Looking at the last 6 months, and more specifically at the last 3 months, it can be seen that the rate of inflation is moderating in the prices of tradable and non-tradable products.”
“The expectations and forecasts for inflation for the first year are within [target ranges], in the vicinity of its upper limit. Expectations from the capital market for the second year and beyond are within the target range,” it added.
The Bank also highlighted a downward trend in labor market vacancies and house market activity moderation as additional signs indicating that another interest rate hike was not necessary.
Had the rate been raised by 0.25 percent or higher, it would have brought the interest rate up to levels not seen in Israel since 2006.
According to the bank’s updated macroeconomic forecast, Israel’s GDP is expected to grow in 2023 and 2024 at a rate of three percent each year. –i24 News
