Israeli Central Bank Holds Interest Rate at 3.25%

The Bank of Israel maintained its benchmark interest rate steady at 3.25%.  The Bank noted: "Forecasters' inflation expectations for the next twelve months remained steady at slightly below the upper limit of the target range.  Forecasters' inflation expectations and those derived from the capital market go together with the assessment that the Bank of Israel will continue to increase the interest rate, but at a slower pace than in the first half of the year."  The Bank also maintained the view that: "at the current level of the interest rate, monetary policy continues to be expansionary."

Previously the Bank also held its monetary policy interest rate unchanged at its June meeting, after increasing the interest rate by 25 basis points to 3.25% at its May meeting this year.  Israel recorded annual inflation of 4.2% in June, slightly higher than 4.1% in May, and 4.0% in April and above the Bank's inflation target range of 1-3%.  Israel reported GDP growth of 4.8% (annualised) in the March quarter, meanwhile the Bank said that: "developments in debt crises, the weakness of the US economy, and geopolitical risks, increase uncertainty about the pace of economic growth."

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