The Bank of Israel’s Monetary Committee announced that it left the interest rate unchanged at 4.5%, as expected. This is the eighth time in a row that the Bank of Israel has left interest rates unchanged, after reducing them from 4.75% in January 2024.
At the identical time, the Bank of Israel’s research department published a revised economic growth forecast. GDP research predicts GDP growth of 0.6% in 2024 and 4% (from 3.8%) in 2025, barely higher than the previous forecast in October 2024. Research predicts GDP growth of 4.5% in 2026
The Bank of Israel expects interest rates to drop to 4.25% and even 4% by the tip of 2025.
Justifying its decision, the Bank of Israel said that as a result of the continuing war, the policy of the Monetary Committee focuses on stabilizing markets and reducing uncertainty, along with price stability and supporting economic activity. The interest rate path shall be determined in line with the degree to which inflation converges to the goal, the upkeep of stability in financial markets, economic activity and monetary policy.”
On inflation, the Bank of Israel stated: “The inflation rate stays stable at 3.4%. Tax changes, particularly the VAT increase, combined with persistent supply constraints and excess demand, are expected to lift the inflation rate in the primary half of this 12 months, and inflation is predicted to fall to focus on within the second half of the 12 months. compartment.”
The Bank of Israel’s research department predicts inflation will fall to 2.6% by the tip of 2025, down from its previous forecast of 2.8%.
Published by Globes, Israeli Business News – pl.globes.co.il – January 6, 2025
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