Israel: Rates expected to raise as inflation spikes

i24NEWS - Reuters

2 min read
Israelis withdraw money from an ATM machine in Jerusalem on February 22, 2018.
Dario Sanchez/Flash90Israelis withdraw money from an ATM machine in Jerusalem on February 22, 2018.

Low employment and a growing economy contributed to the current situation

As inflation rises in Israel, The Bank of Israel is expected to raise short-term interest rates by a quarter-point next week to bring the elevating inflation under control, Reuters reported.

For the first time since 2011, Israel’s inflation reached 4 percent, despite the government’s annual target of 1 percent to 3 percent.

Low employment and a growing economy contributed to the current situation, according to the news agency.  

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“In light of inflation, the depreciation of the shekel and interest rate increases in the world, and despite the weak growth figure" the Bank of Israel will raise its key rate 0.25 points, Ofer Klein, head of economics and research at Harel Insurance and Finance, told Reuters.

Experts believe that the central bank’s monetary policy committee (MPC) will increase the benchmark rate to 0.6 percent to 0.75 percent from 0.35 percent, Reuters reported after consulting with 14 economists.

Israel’s economy shrunk by 1.6 percent in the first quarter of 2021 compared with the prior three months. However, economists said that the figure was “misleading,” emphasizing that the country’s economy is still healthy.

The Bank of Israel estimates an economic growth of 5.5 percent in 2022.

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