The governor raised the interest rate by 0.4%, to 0.75%
The Bank of Israel was surprised when it announced that the interest rate in the economy would rise by 0.4% and now stand at 0.75%, despite the fact that in the financial system the prevailing opinion was that the governor would be content with an increase of only 0.25%.
Between Ashkenazi
23/05/2022
Monday, 23 May 2022, 15:44 Updated: 16:11
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The Governor of the Bank of Israel, Prof. Amir Yaron, decided to update the interest rate in the economy by 0.4% and to set it at 0.75%.
This is the second consecutive interest rate update carried out by the Bank of Israel, following a 0.25% update in April.
Although this update, although high compared to expectations and the previous update, is still relatively low, especially compared to many countries, especially the US and UK, it should be borne in mind that inflation in Israel (4% in the last year) is outside the upper limit of the target. Israel is relatively low compared to most OECD countries.
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Governor of the Bank of Israel, Prof. Amir Yaron.
Continues to raise interest rates as said, but at a relatively moderate pace (Photo: Reuters)
It is possible that the relatively high increase is also due to the governor's desire to cool the housing market, which has risen sharply and tends to be more affected by any update of the interest rate.
At the same time, the Bank of Israel's announcement did not address the issue of housing as affecting the Monetary Committee's considerations (but only a mention of the last year's rise in prices by 16.3%). It is relatively high and therefore allows for the continuation of the policy of raising interest rates as planned.
Among the other factors the committee took into account were also fears of a global slowdown in the face of the Russia-Ukraine war and a slowdown in production in China.
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Bank of Israel
Amir Yaron