The Limited Times

Now you can see non-English news...

Shrinking unemployment sends to the governor: Raise interest rates - Walla! Of money

2022-04-05T07:56:06.296Z


Ofer Klein, Head of the Economics and Research Division at Harel Insurance and Finance: Labor market data increase the chance of raising interest rates by more than 0.15 basis points, as early as this coming Monday


Shrinking unemployment sends to the governor: raise interest rates

Ofer Klein, Head of Economics and Research at Harel Insurance and Finance: The latest employment market data indicate a tight labor market and increase the chance of raising interest rates by more than 0.15 percentage points this coming Monday

Ofer Klein, Head of the Economics and Research Division at Harel Insurance and Finance

05/04/2022

Tuesday, 05 April 2022, 10:35 Updated: 10:51

  • Share on Facebook

  • Share on WhatsApp

  • Share on Twitter

  • Share on Email

  • Share on general

  • Comments

    Comments

Ofer Klein, Head of the Economics and Research Division at Harel Insurance and Finance, reminds us that this coming Monday the first rate hike by the Bank of Israel is expected since 2018.



According to Klein, recent labor market data indicate a tight labor market (unemployment rate dropped to 4.7 percent - low Most since the crisis) also increase the chance of raising interest rates by more than 0.15 percentage points.

However, we believe that the rate of increase in interest rates in Israel later this year will be moderate from the rate reflected in the financial markets in order to prevent a significant strengthening of the shekel.

More on Walla!

You will not believe how much it costs: this is how you will arrange a festive and impressive table for Passover

In collaboration with Rami Levy

Jerome Powell, Governor of the Bank of America.

Will the employment data cause him to raise the interest rate by half a percent? (Photo: Reuters)

In the US, a green light for a half percent rise in interest rates

Also in April, the US employment report was positive when there was an increase of about 430,000 new jobs and the previous two months' data were updated upwards.



The unemployment rate (calculated in a separate survey) fell to 3.6 percent while improving the participation rate. An hourly rate of 5.6 percent (in the last 12 months) will in our estimation lead the US Federal Reserve to raise interest rates by half a percentage point at the next sitting.



Inflation, which will be published next Wednesday and rise to close to 8.5 percent, also supports this.

It should be noted that this sharp rise in interest rates has already been reflected in short-term US bond yields.

Ukraine.

Along with the atrocities on a human level, the war also has a difficult economic price to pay for the rest of Europe (Photo: Reuters)

In Europe, the war goes straight into the pockets of the civilians

Inflation in the eurozone soared to 7.5 percent in March (the initial estimate) higher than earlier estimates, with about 4.5 percentage points following the rise in energy prices (45%).



In light of this and the expectation of price increases also in April, we expect that next Thursday the Central Bank of the Eurozone will continue to gradually reduce its purchases and will not rule out raising interest rates upon completion of purchases in the last quarter of the year.



In Europe, too, the markets are pricing an interest rate hike later this year, but in our estimation it is too rapid not to take into account the negative impact of the war on private consumption that will be reflected in the coming quarters.

Medical teams prepare for corona tests in China, January 2022. While the world is easing corona restrictions, China is tightening (Photo: GettyImages)

In the world it is easier, in China it is still strict

Despite the renewed rise in morbidity in the world, in most countries corona restrictions are at their lowest level since the onset of the crisis.



China stands out as almost the only unit still pursuing a stricter closure policy (despite partial flexibility of the rules).

The restrictions are reflected in economic activity, according to the Purchasing Managers' Index for March for the Manufacturing Industry, which fell to 48.1 points, a figure that indicates a contraction in activity.



This is the fastest decline in corporate sentiment since the start of the Corona crisis.

The surge in raw material prices as a result of the war also continues to hurt companies' profits, as they manage to only partially "roll over" the increase in customer costs.

In our view, the slowdown along with relatively low inflation support continued central bank interest rate cuts.



The author, Ofer Klein, is the head of the Economics and Research Division at Harel Insurance and Finance.

  • Of money

  • Our money

Tags

  • Bank of Israel

  • interest

  • U.S

  • Europe

  • Ukraine

  • China

Source: walla

All business articles on 2022-04-05

You may like

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.