BOI keeps interest rate unchanged 28 May 2018
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BOI keeps interest rate unchanged

  • 5/28/2018
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    The Monetary Committee intends to maintain the accommodative policy as long as necessary in order to entrench the inflation environment within the target range. BOI 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 Bank of Israel Monetary Committee decided today (May 28, 2018) to keep the interest rate unchanged at 0.1 percent

    • The inflation environment continues to rise, supported by the accommodative monetary policy, but remains below the target. One-year expectations and forecasts are slightly below the lower bound of the target range, and inflation expectations for two years and longer are within the target.
    • In the first quarter as well, the economy grew at a solid pace and in a balanced manner. Services exports continued to grow at a rapid rate and growth in goods exports continued. The labor market remains tight. After some slowing, business sector wages resumed rising, at a more rapid rate.
    • Data regarding the global economy remain positive, though the picture now is less even. In recent weeks, the risk of a trade war breaking out declined, but geopolitical risks continue, and the financial risk in emerging markets increased. In the US, the normalization of monetary policy is expected to continue, while in Europe, Japan, and the UK inflation is weakening and the withdrawal from monetary accommodation will likely be deferred.
    • In the past year, the nominal effective exchange rate has been relatively stable. Since the previous interest rate decision, there has been an appreciation of 1.4 percent in terms of the nominal effective exchange rate.
    • In the past 6 months, home prices declined by 2.7 percent. The number of transactions by buyers upgrading their homes continues to decline, but the most recent data indicate an increase in transactions by first home buyers. The decline in residential construction investment continues.
    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.

    The next decision regarding the interest rate will be published at 16:00 on Monday, July 9, 2018.

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