The Governor of the Bank of Israel is not worried: no abnormal inflation is expected in Israel

The Governor of the Bank of Israel is not worried, and in his opinion no abnormal inflation is expected in Israel at all. In addition, the Bank of Israel will continue to purchase dollars in the foreign exchange market, as long as necessary, according to remarks made last night (Thursday) by Prof. Amir Yaron in a lecture at Tel Aviv University.
Referring to the concerns currently being heard in the economy from an increase in inflation, ahead of the publication of the index this coming Monday, the Governor said that "we estimate that inflation in the coming months will be around the upper limit of the target (up to 3%). The target center environment (2%) after the disruptions in the supply chains that currently restrict supply have weakened. "
The governor noted that "we see some encouraging evidence of easing some of the difficulties in global supply chains, and over time this process is expected to support declining commodity and transportation prices. "Thanks to the 'package deal' that regulates wage increases in large parts of the economy looking ahead. We are also looking at the world in terms of inflation developments. In an international comparison, it can be seen that inflation in Israel is in the bottom decile among OECD countries."
The Governor of the Bank of Israel added that "the current situation allows us a space in the management of monetary policy while we continue to constantly monitor developments in the various areas, thus continuing to support continued economic activity and emerging from the crisis. The Research Division expects the Bank of Israel "It is either 0.1% or 0.25%. This is a forecast that reflects a more measured interest rate path compared to other countries in the world, some of which have already begun a monetary contraction after inflation significantly exceeds their targets."
Referring to the issue of the exchange rate, after the dollar, the euro and the pound fell to lows for decades, the Governor noted that "in the long run, the Bank of Israel has created a process over the years that allowed the economy to gradually adapt and move production-oriented , Which is a great achievement. Looking ahead, as we have already shown, a $ 30 billion acquisition threshold does not constitute a top barrier to the level of intervention. We are constantly reviewing developments in the foreign exchange market and the Bank continues to conduct its policy in accordance with the state of the economy and the continuation of economic activity. We will not be indifferent to changes that do not correspond to the basic data of the economy. "
The foreign exchange market closes today with a turbulent and volatile week, including the Bank of Israel's intervention in trading. 3.5621 compared to 3.5773 yesterday, and its continuous price dropped until Friday night to 3.5553.