The Governor of the Bank of Israel has decided: Stop supporting the bond market

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Amir Yaron Governor of the Bank of Israel (Photo of the Bank of Israel Spokeswoman, freepik, Magma Images)

The Bank of Israel leaves the interest rate for December unchanged at 0.1%, but the big news is as usual in the announcement itself, where the Bank of Israel says that they will stop buying bonds in the markets in two weeks and thus end the bank’s inflow plans to the foreign exchange market. Ended) and both in the bond market.

This means that the Governor of the Bank of Israel, Amir Yaron, maintains consistency and credibility and actually prepares the ground for raising interest rates whenever possible and therefore brings about an effective rise in interest rates by raising bond yields at the end of which the market (and economy) can contain official interest rate hikes.

The Bank of Israel says today that the recovery of the labor market is moderating even though the economy continues to develop positively. “However, there is still a degree of uncertainty regarding economic activity in the medium term, especially with regard to the labor market situation, and in view of the existence of the risk of recurrence of additional disease waves in Israel and around the world.”

As for the foreign exchange market, the Bank of Israel says that they will act as necessary but without a defined plan when we mention that the Bank of Israel is actually interested in providing exchange rate volatility and less fighting for a specific exchange rate, which is also excellent.

“During the period under review, there was a sharp appreciation in the shekel, during which the Bank completed the $ 30 billion acquisition plan announced by the Monetary Committee at the beginning of the year.

“Labor market data indicate a certain difficulty in returning the economy to the levels of employment and unemployment that characterized it before the crisis. Although the broad unemployment rate fell to about 7% in October, the employment rate remained stable.”

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