Stock Exchange (Photo by Adam Shuldman Flash 90)
IBI’s chief economist, Rafi Gozlan, estimates that the Bank of Israel’s window of opportunity to raise interest rates is narrow. According to Gozlan, most of the inflation in Israel is imported, so stopping it in the United States will also curb price increases here.
“Inflation continues to be low relative to the world, especially given the contribution of raising taxes. An increase in the probability of raising interest rates later this year, but the potential for increases is low and largely dependent on the Fed. The January index has surprised up Government tax increases Inflation in Israel continues to be among the lowest in the world, especially when the contribution of tax increases is taken into account.
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“Inflation in the coming year is expected to amount to about 1.7%, with most of the increase expected in the first half of the year and to reflect the continued rise in commodity prices and supply chain disruptions. Hold, are expected to lead to a slowdown in the inflation environment in the second half of the year into 2023.
“The increase in the annual rate above the upper limit of the target is not a real surprise and does not in itself require a policy response, as long as the estimate of inflation moderation is maintained later in the year. In the effectiveness of monetary policy to lower US inflation. “In other words, the more the Fed accelerates restraint, the more it will push down imported inflation and do most of the work for the Bank of Israel,” says Gozlan.
As for the increase in apartment prices, Golan says that the increase in apartment prices continued in the last index as well, although it is important to note that the measurement period was still affected by the transactions made before the purchase tax increase. “Although the more effective way to deal with rising house prices is by raising interest rates, the Bank of Israel has refrained from using this tool for the past decade to deal with the sharp rise in house prices, so without signaling a change in this approach, it is reasonable to expect a further rise in house prices. Macro-stable tools and not at interest. “
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