The Monetary Committee has decided to leave the interest rate unchanged at 0.1%

by time news

The Monetary Committee of the Bank of Israel decided today to leave the interest rate unchanged at 0.1%.
The committee justified its decision, noting that “the Israeli economy continues with continuous and expanding economic activity alongside the corona virus. 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 Israel and around the world.

The October index rose by 0.1%, and inflation in the last twelve months has fallen to 2.3%. So far, interest rate hikes have been recorded worldwide only in countries where there has been a significant deviation from the inflation target, while in Israel market expectations are within the target range and according to forecasts by the Research Division of the Bank of Israel and forecasters, inflation is expected to be lower in 12 months.

After in the second quarter of the year the economy grew at a rapid pace that expressed the process of emerging from the crisis, according to the first estimate of the national accounts data of the third quarter, the growth of the economy slowed and stood at an annual rate of 2.4%. However, growth in the last four quarters has been about 6%.

During the period under review, there was a sharp appreciation of the shekel, during which the Bank completed the $ 30 billion acquisition plan announced by the Monetary Committee at the beginning of the year. The Committee emphasizes that this threshold is not an upper threshold and the Bank continues to operate in accordance with the state of the economy and the continuation of economic activity.

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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.

Apartment prices have risen by about 10% in the last 12 months, a high rate compared to recent years. The annual rate of increase in rental prices remains relatively moderate.

In the global economy, the recovery trend continues, but there are signs of a slowdown in growth. The global inflation environment continues to rise and be high, although estimates by central banks and forecasters in leading countries are that a significant portion of the rise is not expected to persist. Meanwhile, the monetary tightening in the world continues.

The Bank of Israel will complete its purchases of government bonds in the markets during December, thus ending the intervention programs in the bond markets announced during 2020.

The process of recovery of the Israeli economy from the crisis continues. However, there are still challenges to economic activity. Therefore, the Committee will continue to pursue an expansionary monetary policy over time, in line with the pace of growth and employment and the path of inflation. This is in order to continue to support the achievement of policy goals and the economic recovery from the crisis, and to ensure the continued proper operation of the financial markets. “

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