(Communicated by the Bank if Israel Spokesperson)
The Monetary Committee intends to maintain the accommodative policy as long as necessary in order to entrench the inflation environment within the target range.
The Bank of Israel continues to monitor developments in inflation, the real economy, the financial markets, and the global economy, and will act to attain the monetary policy targets in accordance with such developments.
In recent months, the 12-month inflation rate has stabilized at slightly below the lower bound of the target range, and inflation for the 12 months ending in May was 0.8 percent. With that, the inflation rate is expected to decline in the coming months, partly as a result of an expected reduction in water and fuel prices and in the prices of after-school childcare.
The rate of increase in tradable goods prices remains negative against the background of the appreciation of the shekel, but continues to increase, impacted by relatively high inflation abroad. The rate of increase in prices of nontradable items has moderated, but is within the inflation target. One-year expectations from the various sources ranged in opposite directions, but all remain below the target range. Third year forward inflation expectations also declined to below the target range, but longer term expectations are anchored within the range.
The increase in nominal wages, the strong economic environment, and inflation worldwide will act to increase inflation, while the appreciation that has occurred, the increased competition in the economy, and measures adopted by the government to reduce the cost of living will act in the opposite direction.
External links: