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Economic Reports

Investors' Review

Issue No. 125
June, 2015

The Bank of Israel avoided a surprise and kept its interest rate unchanged at 0.1%.

Most forecasters in the financial markets expected the Bank of Israel (BoI) to leave its June interest rate unchanged at 0.1%, and this is indeed what occurred. The background factors emphasized by the BoI in its June interest rate decision include: (a) a slight increase in the "inflation environment" recently; (b) a mixed picture regarding economic activity, involving also items that attest to an expansion in activitiy, particularly in the area of private consumption; (c) the view that the low economic growth rate in the US in the first quarter of the year is temporary and transitory, and that in the remainder of the year growth will return and will increase, together with an impact on economic growth in Israel and on the interest rate path in the US; and (d) continued heightened activity in almost all aspects of the local housing market.
Furthermore, the BoI noted that the decision to keep the interest rate unchanged was taken despite the appreciation of the shekel vis-à-vis the currency basket since the meeting of the Monetary Committee at the end of April. 


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