​(Communicated by the BOI Spokesperson)

The Monetary Committee decided on November 27, 2017 to keep the interest rate unchanged at 0.1 percent.

Following are the main considerations underlying the decision:

In recent months, there has been a slight increase in the inflation environment, though it remains below the target. Annual inflation increased, and short-term expectations rose slightly. Long-term expectations are anchored within the target range.

The economy continues to expand at a pace that is consistent with its potential growth. However, the first estimate of third quarter National Accounts shows a halt in the recovery of exports, due to a decline in goods exports, while private consumption returned to being the main component of growth. All indicators from the labor market continue to point toward its strength, and to show that it hovers around full employment.

The positive momentum in the global economy continues to gain traction. Despite the improvement in activity and the increase in oil prices, inflation in most major economies remains below target. Some of the major central banks shifted their monetary policy to a less accommodative direction, but the monetary environment remained very expansionary.

The exchange rate has stabilized since the last monetary discussion. In the past 12 months, the shekel has appreciated by 5.0 percent in effective exchange rate terms.

Housing market data continue to indicate some slowdown in activity, with the continued increase in home prices at a relatively moderate rate.
 
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.

External links:

• Full BOI report