Despite the first signs of a slowdown in the American economy, the interest rate on the dollar was raised this evening (Wednesday) by a sharp rate of 0.75% - which put it at 2.5% (the upper range).
This is the sharpest sequence of increases since the 1980s.
The interest rate market predicts that the interest rate on the dollar will rise to 3.7% by the end of this year.
The move is intended to curb the rampant inflation in the US which has already reached an annual rate of 9.1% last June - a record since 1981.
According to some of the previous estimates, the US central bank will surprise and raise the interest rate by 1%, similar to the central bank of Canada last week.
However, this possibility has become less likely in the last week, in view of the drop in inflation expectations in the US as well as the first signs of a cooling of the labor market in the US.
The American central bank is anxiously monitoring the economic activity data of the economy and the increasing signs indicating its slide into recession.
The analysts predict that the rate of inflation in the US is approaching its peak and will begin to moderate in about two to three months, due to the drop in sea freight prices in the recent period, the price drops in the commodity market and the price of oil in particular.
The decision on the interest rate increase in the US may also have a large effect on the continuation of the Bank of Israel's monetary policy. Although the rate of inflation in Israel is far from being similar to that in the US, and in fact constitutes half of it, it seems that the Bank of Israel is careful not to deviate too far from the interest rate in the US for the time being "B. According to most expectations, the interest rate in Israel will rise in August by half a percent to a level of 1.75%.
"The main reason why the Bank of Israel will raise the interest rate by 0.5% in the upcoming decision, which will be in August, is that the Federal Bank is expected to raise the interest rate by 0.75%," explains Bank Hapoalim's Chief Financial Markets Strategist Modi Shafrir in a conversation with Israel Hayom.
"Governor Yaron has recently continued to take a 'nice' tone, similar to the leaders of the world's central banks, who recently declared their intention to carry out "front loading" for the interest rate hike process - a fact that supports the continued flattening of the curves in Israel.
Modi Shafrir, photo: Modi Shafrir // Inbal Marmari
"The governor said that 'we are determined to fight inflation and make sure it does not reach the levels we see in Europe', but hinted that the rate of interest rate increases will be moderate compared to the rate in the US - 'The process now in policy is like moving from a city road to a highway, it should not be done too slowly And not too fast."
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