Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Israel central bank holds rates as economy growing at 'solid pace'

Economic IndicatorsMay 29, 2017 10:09AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: An Israeli flag flutters outside the Bank of Israel building in Jerusalem

By Steven Scheer

JERUSALEM (Reuters) - The Bank of Israel on Monday left its benchmark interest rate <ILINR=ECI> at 0.1 percent, the same level it has been for more than two years, saying the economy continues to grow at a solid pace.

All 10 economists polled by Reuters had forecast no change by the central bank, which is widely expected to hold the line on rates until the second quarter of 2018, when a hike is forecast.

In a preliminary estimate, Israel's economy grew a slower-than-expected annualised 1.4 percent in the first quarter in a period that was held back by a surge of car buying late in 2016 ahead of tax increases at the start of 2017. Economists on average had forecast a 3.7 percent increase.

The central bank acknowledged that volatility in vehicle purchases had an effect on data from the fourth quarter of 2016 -- in which the economy grew an annualised 4.7 percent -- and first quarter of 2017.

"Net of this effect, the economy has been growing strongly for approximately a year and a half, and the pace may even be higher than the long-term growth potential," the Bank of Israel said, noting the labor market was near full employment. "In the first quarter, the improvement in growth of exports continued, against the background of the expansion of world trade."

Annual inflation eased to a 0.7 percent rate in April from 0.9 percent in March, remaining below the government's target range of 1-3 percent.

The central bank said that while wages were rising, inflation in tradable goods remained negative mainly due to the continued appreciation of the shekel, which stands at a 28-month high versus the dollar <ILS=> and all-time peak against a basket of currencies.

"The increasing competition in the economy, as well as additional policy measures announced by the government --reducing purchase tax and customs on various products and lowering the cost of afterschool care -- may continue to slow the return of inflation to the target range," it said.

In April, the central bank estimated an inflation rate of 0.8 percent in 2017, rising to 1.5 percent in 2018. It also projects economic growth of 2.8 percent this year, down from 4 percent in 2016.

The central bank, which said there was a cooling of the housing market, reiterated that the monetary policy committee "intends to maintain the accommodative policy as long as necessary in order to entrench the inflation environment within the target range."

The bank stressed a divergence of monetary policy globally, saying the Federal Reserve is expected to rate U.S. rates in June while Europe and Japan continue accommodative policies.

Israel central bank holds rates as economy growing at 'solid pace'

Related Articles

China Factory Inflation Slows Down From 26-Year High
China Factory Inflation Slows Down From 26-Year High By - Dec 08, 2021

By Doris Yu – China’s factory inflation slowed down slightly in November from a 26-year high, helped by a government crackdown on runaway commodity prices and an...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email