Monday, October 24, 2011

Bank of Israel Keeps Interest Rate at 3.00%

The Bank of Israel held its benchmark interest unchanged at 3.00%.  The Bank said: "The decision to leave the interest rate for November unchanged after reducing it for October is in line with monetary policy aimed at stabilizing the rate of inflation within the price stability target range of 1–3 percent over the coming 12 months, and is intended to support growth while preserving financial stability. The path of the interest rate in the future depends on developments in the inflation environment, growth in Israel, the global economy, the monetary policies of major central banks, and developments in the exchange rate of the shekel."

Previously the Bank cut its monetary policy interest rate, after leaving it unchanged at its June, July, and August meetings, and increasing the interest rate by 25 basis points to 3.25% at its May meeting this year.  Israel recorded annual inflation of 2.9% in September, 3.4% in August and July, 4.2% in June, 4.1% in May, and 4.0% in April and just inside the Bank's inflation target range of 1-3%.

Israel reported GDP growth of 4.8% (annualised) in the March quarter, and 3.3% in the June quarter.  The Bank said: "GDP growth for 2011 is forecast to be 4.7 percent, and 3.2 percent in 2012"  The Israeli Shekel (ILS) has weakened about 2.5% against the US dollar this year, while the USDILS exchange rate last traded around 3.65


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