Israel’s central bank announced on Monday that it will keep the base interest rate for the next seven weeks at 0.1 percent.
The decision was taken against the background of the coronavirus crisis that affected the Israeli economy and negative inflation, which has dropped by 0.6 percent in the last 12 months, much below the government’s target ranging between 1 and 3 percent.
According to the central bank, one-year inflation expectations from the various sources remained below the lower bound of the target range.
However, forward expectations from the second year onward are within the target range.
The continuing strengthening of Israel’s new shekel against the U.S. dollar also contributed to keeping the basic interest rate at its low level.
The shekel representative exchange rate against the dollar was set at 3.206 shekels for 1 dollar on Monday, lowest rate since October 1996.
The bank noted that it will continue to use a range of tools, including the interest rate tool, to achieve the monetary policy goals and to moderate the adverse economic impact resulting from the coronavirus crisis.