Bank of Israel raises interest rate to 10-year high
The Bank of Israel raised the interest rate by 0.75 basis points to 2.75% at today’s meeting. The Central Bank, which made its first rate hike in April, increased the interest rate from 0.10% to 2.75% in 5 meetings.
The Bank of Israel has a low interest rate compared to many countries. The reason for this is that the rate of increase in inflation is low compared to other countries. Inflation in Israel fell to 4.6% in August after hitting a 14-year high of 5.2% in July.
The Bank of Israel updated its forecasts at today’s meeting
Inflation is expected to fall to 4.6% in 2022 and 2.5% in 2023.
Growth is forecast at 6% in 2022 and 3% in 2023.
The meeting notes emphasized the acceleration in the increase in rental prices in the country and the decline in the currency in the last month.
House prices in Israel have risen by 17.9% over the past year, significantly above the pace of recent years. The monthly increase in rental prices accelerated in August, with rental prices rising by 0.8%.
Since the previous meeting on August 22, the shekel has fallen 8% against the US dollar, 6.2% against the euro and 5.9% in terms of the nominal effective exchange rate.
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