Gil Befman (Photo by Oren Dai)
The chief economist of Bank Leumi, Gil Befman, estimates today that the first interest rate hike in Israel will be in the coming months and possibly even in April, and it will be 0.15%.
“As expected, the Bank of Israel has left the interest rate unchanged. However, as part of the forward guidance, the Bank of Israel has changed the tone and is now preparing the market for raising interest rates that will begin in the coming months. “High in Israel alongside the corona virus; inflation in Israel, which is near the upper limit of the target; the trend of rising house prices in recent months; the situation in the world, according to which world monetary tightening has begun,” he says.
More in-
The Bank of Israel notes that although the general employment environment in Israel is close to the situation on the eve of the crisis, there has been a change in the employment mix and it is clear that most business sectors are still underemployed, while in the health and information and employment sectors employment expanded beyond pre-crisis employment trends. “The average wage in the economy is rising in line with the trends that preceded the corona crisis, as is the average wage after neutralizing the effects of employed vehicles that characterized the period of the corona crisis, so there is no over-move in this area.”
Befman also analyzes the Bank of Israel’s interest rate announcement and says that in the coming months the conditions will mature to begin a gradual process of raising interest rates in accordance with the inflation route, the growth rate and employment. This is in order to continue to support the achievement of policy objectives, and to ensure the continued proper operation of the financial markets.
“In our opinion, this is the first step in raising interest rates, by about 15 basis points, from 0.1% to 0.25%, probably in one of the upcoming decisions: April, May or the beginning of July. The exact timing will be affected by the actual development of the data, including: the intensity of the increase in the actual inflation rate and inflation expectations; Inflation of asset prices in Israel; Monetary developments in the world, and the state of the Israeli economy, in particular as real activity in the various sectors of the economy and in the labor market will continue and improve to a higher level than it was before the crisis.
The process of raising interest rates is expected to be moderate relative to that expected in the United States, while the Bank of Israel will strive to return to a situation in which interest rates in real terms will no longer be negative, through a “scissor movement” of expected inflation later this year. And measured. “
Comments on the article(0):
Your response has been received and will be published subject to system policies.
Thanks.
For a new response
Your response was not sent due to a communication problem, please try again.
Return to comment