Israel’s central bank keeps base interest rate unchanged at 0.25 pct

Israel’s central bank announced Wednesday it will keep the base interest rate for the next six weeks at the rate of 0.25 percent.

The Bank of Israel’s monetary committee stressed that since the previous interest rate decision in July, the inflation was lowered.

Israel’s June and July 2019 price indices were significantly lower than expected, with inflation of only 0.5 percent in the last 12 months.

In addition, since the previous interest rate decision, the Israeli new shekel has strengthened by 3 percent against Israel’s currency basket and by 8.7 percent since the beginning of 2019.

The bank noted that if the appreciation persists, it will be difficult to place the annual inflation rate back to the government target between 1 and 3 percent.

The committee estimated that because of the turnaround in the inflationary environment in Israel, as well as the monetary policy of major central banks, the moderation in the global economy and the continued appreciation of the shekel, Israel’s basic interest rate will not rise for a long time.

The committee added that due to the global market developments, the Bank of Israel may take certain steps to further expand monetary policy and bring inflation into the target range.