BOI Monetary Committee leaves interest rate unchanged 26 February 2018
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BOI Monetary Committee leaves interest rate unchanged

  • 2/26/2018
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    The Monetary Committee will maintain the accommodative policy as long as necessary in order to entrench the inflation environment within the target range. The Bank of Israel will act to attain the monetary policy targets in accordance with developments.
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    Copyright: Bank of Israel
     
     
    ​(Communicated by the BOI Spokesperson)

    The Monetary Committee decided on February 26, 2018 to keep the interest rate unchanged at 0.1 percent.

    Following are the main considerations underlying the decision:

    • The inflation environment remains below the target, but there has been some increase in inflation expectations for the short and medium terms. In the coming months a temporary decline in the annual inflation rate is expected. The depreciation that occurred in the past month, to the extent it persists, as well as the wage increase in the economy, will support the return of inflation to the target range.
    • Economic activity continues to expand in line with the potential growth rate. Growth in 2017 was more balanced. Against the background of the rapid growth in world trade, there was positive growth in goods exports, despite the appreciation, and services exports increased at a solid pace. In contrast, investment in residential construction has declined for the past three quarters. Labor market data continue to indicate a high level of activity in a tight labor market. Recent indicators support the assessment that the growth of economic activity is continuing in the first quarter of 2018.
    • The improvement in the global economy is solidifying, and forecasts for growth and world trade continue to be revised upward. The correction in global equity markets has halted as of now. In the US, the federal funds rate is expected to continue to increase, while most central banks continue to adopt accommodative monetary policy, but financial markets are pricing in a somewhat less accommodative future policy path.
    • Since the last interest rate decision, the shekel has weakened by 3.1 percent in terms of the effective exchange rate, and by 1.6 percent against the dollar. In January, the Bank of Israel intervened in the foreign exchange market, buying $1.8 billion.
    • Housing market data continue to indicate a slowing of activity. There were declines in home prices according to the last three monthly readings.

    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.

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