Bank of Israel again left the basic interest rate in Israel at 0.1%

The Bank of Israel again left the basic interest rate in Israel at 0.1%. This was decided by the Bank's Monetary Committee. As a result, the prime interest rate will remain at 1.6%. This is while the State of Israel does not yet have an approved budget for the second year in a row and when the eyes are on the party leaders who are expected to decide in the coming days whether the State of Israel is on the way to a government or a fifth election.
The interest rate was reduced by the Bank of Israel in the midst of the first closure, in April 2020, from 0.25% to 0.1%. It was then explained that the aim is to help propel the economy and rescue it from the severe crisis.
It was the only time that the current governor, Prof. Amir Yaron, has changed the level of interest rates in the economy since he took office in December 2018. A month before the beginning of his term, the acting governor, Dr. Nadine Bodo-Trachtenberg, unexpectedly raised the interest rate from 0.1% to 0.25 %.
It is estimated that a change in interest rates is not on the agenda in the coming months, but there are expectations that interest rates may rise towards the end of the year or early 2022, if inflation continues to increase due to spending by Israelis, with the economy recovering, after the corona year with three closures.
Meanwhile, the consumer price index continued to rise in April, completing a 1.1% increase since the beginning of the year. Meaning - the economy continues to recover from the corona year and consumption is rising. However, it should be noted that it is not certain that the trend will continue with the same intensity in May, as during it the "Wall Guard" operation and the riots in the mixed cities took place, which are known to lead to the temporary closure of many businesses and heavy economic damage.
However, the bank said in a statement that "the escalation in the security situation that lasted about ten days probably affected the economic recovery process only to a limited extent: the duration of the escalation was relatively short, and as a result of the Corona crisis large parts of the economy adapted to work and remote consumption. "It was exporting tourism services, while as a result of the Corona crisis, these are already low anyway."