9 July 12 13:53–The Bank of Israel today published the minutes of the latest Monetary Committee meeting, which decided to cut the interest rate for July 2012. Five committee members voted to cut the interest rate by 25 basis points, and one member voted to keep the interest rate unchanged at 2.5%.
The Monetary Committee meeting focused on the risks to the Israeli economy from global economic conditions, particularly the situation in Europe, inflation and inflation expectations in Israel, Israel’s fiscal policy, and the housing market.
Committee members noted that despite the decline in the risk of an immediate crisis, which would derive from Greece’s exit from the eurozone, several indicators became available which pointed to deterioration in the global situation. It appears that growth rates in several countries around the world, even those outside Europe, declined. Global growth forecasts at a number of investment houses were revised downward.
Monetary Committee members assessed that a continued decline in growth rates in the world is liable to have a negative impact on Israel’s economic growth, primarily via a possible blow to exports. Committee members assessed that, in recent months, the economy has continued to grow at an annual rate of around 3%. One member said that data that became available this month indicate that the growth rate continued in the second quarter as well. With that, concerns were raised about the continuation of the current rate of growth due to the decline in growth rates of business sector product, and concern for continued growth of exports…Read More>>