Israeli base interest rate remains at 0.25 pct: central bank

The base interest rate in Israel remains at 0.25 percent, Israeli central bank announced Monday.

The Monetary Committee of the Bank of Israel noted that the rise of the interest rate in the future would be gradual and cautious, allowing the inflation rate to stabilize within the mid-point of the governmental target range: 1 to 3 percent.

The Israeli inflation over the past 12 months stood at 1.3 percent, slightly above the lower limit of the inflation target.

The committee noted that the forecasts for annual inflation are slightly above the lower inflation limit, while expectations for the medium and long terms remain close to the mid-point of the target range.

“The new shekel has strengthened in terms of the effective exchange rate by 6 percent since the beginning of the year. This is the main factor that hinders the continued rise in inflation toward the middle of the target range,” it said.

The current 5.2-percent high GDP growth rate was significantly affected by the increased import of vehicles, the committee added.

In a forecast published last month by the bank, it was estimated that Israel’s base interest rate would rise to 0.5 percent by the end of the third quarter of 2019.

It was also estimated that the interest rate would only double to 1 percent in 2020.