BOI Monetary Committee leaves interest rate unchanged 8 July 2019
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BOI Monetary Committee leaves interest rate unchanged

  • 7/8/2019
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    The Committee assesses that the rising path of the interest rate in the future will be gradual and cautious. BOI continues to monitor developments and will act to attain the monetary policy targets in accordance with such developments.
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    Copyright: Bank of Israel
     
     
    ​(Communicated by the BOI Spokesperson)​

    • The inflation environment is above the lower bound of the target range, and recently it has increased slightly, with the economy being at a full employment environment. Since the beginning of the year, most CPI readings have surprised to the upside. The inflation rate over the preceding 12 months has been 1.5 percent, and it currently seems less likely that inflation will again fall below the lower bound of the target range. Most one-year inflation expectations and forecasts are slightly above the lower bound of the target range, and forward expectations for medium and longer terms remained near the midpoint of the target.
    • In the past year, the shekel has strengthened by 4.3 percent in terms of the effective exchange rate. In the intermeeting period, the shekel was relatively stable vis-à-vis the dollar and the euro, and depreciated slightly in terms of the nominal effective exchange rate. If the appreciation resumes, it is expected to delay the continued increase of the inflation rate toward the midpoint of the target. 
    • For several quarters, the economy has grown at around the potential rate. The moderation in the growth rate of private consumption appears consistent with the exhaustion of the process of expansion in the labor market. Some indicators of second quarter growth point to moderation, but others show that growth is continuing at a solid pace. Labor market data indicate that it remains tight.
    • The risks to the global economy remain significant, and the forecasts for world trade and growth in most regions were revised downward. The expectation in global financial markets is that major central banks will renew the process of monetary accommodation. 

    The Committee assesses that the rising path of the interest rate in the future will be gradual and cautious, in a manner that supports a process at the end of which inflation will stabilize around the midpoint of the target range, and that supports economic activity. The Bank of Israel continues to monitor developments in inflation, the real economy, fiscal policy, the financial markets, and the global economy, and will act to attain the monetary policy targets in accordance with such developments.

    The minutes of the monetary discussions prior to this interest rate decision will be published on July 22, 2019. The next decision regarding the interest rate will be published at 16:00 on Wednesday, August 28, 2019.


     
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