The Monetary Committee of the Bank of Israel decided today (Monday), as expected, to leave the interest rate unchanged at 0.1%.
"The Israeli economy continues to operate continuously and expand alongside the corona virus," the reasons for the decision read.
"However, there is still a degree of uncertainty regarding economic activity in the medium term, especially with regard to the labor market situation, and in view of the existence of the risk of recurrence of additional disease waves in Israel and around the world."
The decision was made against the background of the strengthening of the shekel against foreign currencies in general and the dollar in particular.
An increase in the interest rate could have strengthened the shekel even further.
However, leaving the interest rate unchanged may make it more difficult to cool the real estate market, since the interest rate of mortgage borrowers will not change either.
At the same time, the October index rose by 0.1%, and inflation in the last twelve months has fallen - and stands at 2.3%.
So far, interest rate hikes have been recorded worldwide only in countries where there has been a significant deviation from the inflation target, and on the other hand - in Israel - market expectations are within the target range and according to the Bank of Israel and forecasters' research division, inflation is expected to be lower in 12 months.
