The Limited Times

Now you can see non-English news...

Inflation in the US in August at a rate of 8.3% - in Israel they fear and expect an interest rate increase | Israel Today

2022-09-13T13:44:36.913Z


The American consumer price index moderated to a level of 8.3% in the last 12 months • Inflation data in the US reinforces analysts' estimates that the central bank in the US will raise interest rates by 0.75% in the upcoming decision, which may also affect the Israelis, but depends on the inflation data to be published next Thursday


Inflation in the US is soaring and Israel fears the impact:

the American consumer price index moderated to a level of 8.3% in the last 12 months ending in August compared to the 8.5% annual rate recorded in July. This is the second consecutive monthly decrease in annual inflation in the US.

However, inflation in the US is still close to a four-decade high, and the expectations in the market were for a greater moderation, in view of the drop in commodity prices, primarily fuel, and in view of the strengthening of the dollar. In the meantime, it is expected that trading on the stock exchange today will be with rates falling.

The index for the month of August rose by 0.1% in August - above the expectations of economists who predicted a decrease of 0.1% following the drop in energy prices.

Inflation data in the US reinforces analysts' estimates that the central bank in the US will raise the interest rate by 0.75% in the upcoming decision.

will manage to moderate inflation?

Federal Reserve Chairman Jerome Powell

Right now the economists in Israel think that the interest rate in the US will rise by a very sharp rate of 0.75%, which may also affect the Israelis, but depends on the inflation data that will be published this Thursday. 

"The unexpected acceleration in inflation guarantees a 0.75% increase in the Fed interest rate next week and a further increase in interest rates to at least 4.25% at the beginning of 2023. The Bank of Israel tends to be very influenced by the Fed's policy, but we will wait to see inflation here on Thursday. It is clear that this negative figure supports an increase in yields and in the declines in the stock markets, and therefore also in a certain devaluation of the shekel," says Yonatan Katz, the chief economist of Leader Capital Markets.

Will the interest rate rise?

Governor of the Bank of Israel Amir Yaron (archive), photo: Oren Ben Hakon

Bank of Israel, photo: Oren Ben Hakon

According to Yoni Penning, market economist at Mizrahi Tefahot Bank, "The expectations in the market were for a greater moderation in inflation in the US, in view of the drop in the prices of goods, especially fuel, and in view of the strengthening of the dollar.

The continuation of these trends, the percolation of the effects of monetary tightening, and the erosion of real wages in the US are expected to provide a headwind for inflation in the future as well. On the other hand, the higher than expected figure will increase the fear of inflation becoming entrenched."



He also added that "in recent weeks, the Fed has presented a rare and truly united position, among the members of the bank's board of directors, for the continued implementation of a monetary reduction process. In this context, the relatively high figure is expected to allow the continued reduction of monetary policy in the US, in order to stop the inflationary process.

Given the tight domestic labor market, the Bank of Israel's response to rising inflation has so far been similar to that of the Fed.

In this sense, it is expected that the Bank of Israel will also adopt a broader point of view, to moderate local inflation."

were we wrong

We will fix it!

If you found an error in the article, we would appreciate it if you shared it with us

Source: israelhayom

All news articles on 2022-09-13

You may like

Trends 24h

News/Politics 2024-03-27T16:45:54.081Z
News/Politics 2024-03-28T06:04:53.137Z

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.