Despite price increases and the jump in housing prices: The Bank of Israel’s Monetary Committee has decided to leave the interest rate in the economy unchanged and it will remain 0.1%. The committee decided not to raise interest rates despite the fact that inflation in January exceeded the bank’s target range, for the first time in a decade, and reached 3.1%. Senior officials in the economic system estimate that the bank is waiting for the interest rate increase expected in the United States next month.
The next interest rate decision is expected in April, following a decision by the US Federal Reserve. At the beginning of 2018, the interest rate in the economy was raised to 0.25%, but at the beginning of the corona plague it was lowered to 0.1% to help the economy cope with the crisis.
The Governor of the Bank of Israel is hosted by Pocket Animals
However, the Bank’s Monetary Committee said in a statement that it expects the conditions to mature in the coming months to begin a gradual process of raising interest rates in line with inflation, growth 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.
Raising interest rates in the economy will directly affect hundreds of thousands of households in Israel. Households have mortgages totaling almost half a trillion shekels, almost two-thirds of which have a variable interest rate, which is affected by the interest rate set by the Bank of Israel.