Katz says that there is a fear of moderation in economic activity looking ahead. The moderation in economic activity is expected in Israel and abroad and has a moderating effect on taking credit (also in Israel) which is already well felt in the real estate industry. “You have to remember,” says Katz, “a basic interest rate of 4.5% (assuming an interest rate increase of 0.25%) reflects a real interest rate of around 1.5% in relation to inflation expectations going forward. Both the Fed and the Bank of England are slowing down the pace of monetary tightening despite a high inflation environment.”
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Katz also says that it will be interesting to see the update of the macro forecast of the research department of the Bank of Israel. The previous forecast from the beginning of January assumed a basic interest rate of 4% in the fourth quarter of 2023. “Probably the interest rate forecast will be updated to 4.75% in the first quarter of 2024.”