The decision of the Governor of the Bank of Israel to leave the interest rate unchanged caused a significant strengthening of the dollar against the shekel. The euro also strengthened. One dollar was traded this morning between the banks for three shekels and fifty shekels. The euro was trading at NIS 3,852.
The Bank of Israel has left its interest rate at 0.25%. The Monetary Committee, which made the decision on the matter, noted that interest rates would have to be left for a prolonged period or reduced - in order to support the process that eventually inflation will stabilize in the area of the target area, and the economy will continue to grow.
The Governor of the Bank of Israel, Amir Yaron, said today: "The decision on interest rates has not been easy and has not been unanimous. The economic, current and future picture presented to the committee during the discussions is complex."
Yaron added: "So far, the Israeli economy is relatively immune to the global slowdown and uncertainty created in Israel. However, there has been a certain increase in the rate of exporters reporting erosion in export profits, and if the global slowdown reaches the technology sectors, it will also affect Israeli high-tech. Political uncertainty has so far not adversely affected real activity or financial markets in Israel, and the economy continues to grow, and the construction industry, where government policy has a significant impact, is not slowing down.
"However, the delay in the establishment of the government rejects the long-term problems of the economy, pointed out by the Bank of Israel in the special report on fertility; The menu of measures the government will take makes it difficult for us at this stage to assess what impact they will have on developments in the coming year. "
Yaron added that "any government that is set up must immediately think of a credible route to deal with the deficit. It is a challenge. The economy needs and long-term investments do as our fertility report suggests. You will do an economic examination. Current Value - Time Is Mani 'Clearly it is better to address the problems of the economy as soon as possible'.
The Bank of Israel has left interest rates on hold Despite the recent interest rate decision, which was passed on August 28, the CPI that raised actual inflation (actual inflation in the last 12 months) to 0.6% was published, compared with 0.5% in August. In recent months, actual inflation has been below the Bank of Israel's target range - 1% -3% per year.
In the previous forecast, released three months ago, economists of the research division estimate that the economy will grow by 3.1% this year (compared with 3.2% in the April forecast and 3.4% in the January forecast). In all forecasts published this year, the Bank of Israel estimated that by 2020 the economy will grow by 3.5%. According to the latest official forecast of the Ministry of Finance, the economy will grow by 3.1% and 3.2% in 2020.
The forecast for the export growth research division in 2019 was revised downward by 0.5 percentage point in July, to 3.5%, against the backdrop of the global trade situation. Private consumption growth forecast for the year remains unchanged - 3%. The outlook for the unemployment rate has been reduced - from 3.7% to 3.4% this year, and from 3.7% to 3.3% next year. The inflation forecast for 2019 has been slightly revised upwards, from 1.5% to 1.6% (according to the average of the last three months of the year compared with their counterparts in 2018).