26 August 12 11:58–16 of 19 analysts polled by “Bloomberg” predict that the Bank of Israel will keep the interest rate for September 2012 unchanged at 2.25%. The Bank of Israel kept the interest rate for August unchanged, and it warned that the lack of certainty about how the government intended to meet the deficit target is liable to erode the government and Ministry of Finance’s fiscal credibility.
The analysts believe that the Bank of Israel’s Monetary Committee will prefer to continue sitting on the fence this month, and wait for international developments and clarifications about Israel’s fiscal situation (following the decision to raise the deficit target and possible tax hikes), despite domestic data which indicate a higher risk of recession and a significant worsening of the debt crisis in Europe in recent weeks.
The analysts believe that the Bank of Israel will keep the interest rate unchanged despite the worsening economic environment and the 0.1% rise in the Consumer Price Index (CPI) in July, which resulted in an inflation rate of 1.4% over the preceding 12 months, below the midpoint of the government’s 1-3% inflation target. This figure gives an opening for the Monetary Committee to make more interest rate cuts, in line with analysts’ assessments…Read More>>