Shekel and dollar (Shutterstock photo)
With the beginning of the trading day in Tel Aviv, the dollar plunges another 1% and trades at a level of NIS 3.36. In total, the dollar is down 5% from the annual record recorded at the beginning of July, when it traded at a level slightly higher than NIS 3.52.
In principle, the core data are completely clear: the American economy is headed for an economic slowdown at best and a recession at worst. The background conditions are known to all. Inflation is out of control and hence the interest rate rises to suppress it and hence the path to increasing the burden on the American consumer is shorter than it is and then, as a result, the economy slides into a slowdown and hence the path to a recession is much shorter than people think.
More in-
Today the American consumer price index for the month of August will be published and the working assumption (consensus forecasts) speaks of a decrease in the rate of inflation to an annual level of 8.1% and this after the inflation in July decreased to the level of 8.5% and in June it was higher than 9% which is already a devastating rate of inflation.
The conventional analysis of the data says that the drop in oil prices ($86 per barrel) and the drop in commodity prices will push the index down, but the core index will remain high, which is bad, even very bad, and can only be controlled by means of raising interest rates, which, as mentioned, has significant environmental damage.
If the forecasts in the US turn out to be actual data, then the way is paved for an aggressive interest rate increase by the Federal Reserve, and that means an interest rate increase of 0.75% twice, and that means an interest rate increase of 1.5% over a period of at least 4 months, which, as mentioned, is devastating to the economy.
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