Press conference, Bank of Israel Governor Amir Yaron interest rate increase/Bank of Israel
Governor of the Bank of Israel, Prof. Amir Yaron/screenshot, spokeswoman for the Bank of Israel
The Bank of Israel announced that the interest rate in the economy will remain unchanged and will continue to stand at 4.5%, this after last month it recorded a decrease of 0.25%, for the first time since the outbreak of the Corona epidemic in April 2020.
Economists and analysts were divided regarding the expected decision today, and were divided in their opinions on whether the governor would lower the interest rate or will remain unchanged.
Aside from the reasons for the downgrade, we can mention the decrease in the rate of inflation that has returned to the target range of the Bank of Israel, the strong exchange rate of the shekel and the difficult situation of some households and businesses due to the continuation of the war, which is reflected, among other things, in the postponement of repayment of mortgages and loans.
The fourth quarter data that indicate a significant weakening of activity in the economy also supports the lowering of interest rates as a way to encourage activity.
Aside from the reasons for leaving the interest rate unchanged, one can name the continuation of the war and the danger of another front in the north, which creates instability regarding the future, as well as due to the downgrading of Moody's rating and the high chance that the other rating companies will follow suit.
Discount Bank said that "Today's interest rate decision is not easy, although, in our estimation, against the backdrop of the economic recovery and the postponement of the budget approval, and despite the slowdown in inflation and the strengthening of the shekel, no interest rate cut is expected today."
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