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The expert warns: a sharp increase in interest rates is expected in Israel as well Israel today

2022-09-21T19:26:43.675Z


After the Fed's announcement, economist Mizrahi Tefahot explains: "The course of the hawkish policy in the US will allow a similar step in Israel" • The president of the Association of Chambers of Commerce calls on the Bank of Israel: "to wait until the trend of inflation in Israel becomes clear"


"We anticipate that the path of the hawkish policy in the US will allow a 0.75% increase by the Bank of Israel, in about two weeks," warns Yoni Penning, market economist at Mizrahi Tefahot Bank, after the interest rate increase by the Fed this evening (Wednesday) in the US.

"Since the last interest rate decision, the Fed has provided many indications of its intention to further tighten monetary policy to combat inflation," Penning added.

"However, we see the update of expectations as hawkish even relative to the recent rhetoric, and with the way it was priced in the interest rate market. It confirms the concerns that have been evident in the American stock market in recent times."

A sharp increase of 0.75%.

Fed Chairman Jerome Powell, this evening, photo: AFP

Fanning added: "The course of monetary tightening, which began nearly six months ago, is giving its signals in the American economy. The increase in mortgage interest rates in the United States has already brought home sales to an annual rate of 4.8 million - the lowest since the corona closures.

The resulting decrease in local demand may lead to a further decrease in GDP during the third quarter.

A move which in our estimation, if realized, will lead to an increase in estimates that the American economy is indeed in a recession."

Fanning also said: "Similar to our situation, the core factors, primarily rental prices, continue to support the increase in inflation in the US.

On the other hand, for such a huge country, with an annual population growth of 'only' 0.4%, we see great potential in the continuation of the moderating effect of the drop in disposable income on this section. Looking at overall inflation, to these will of course be added the effects of the drop in energy prices in the US "B, and food prices".

Yoni Penning, market economist Mizrahi Tefahot Bank, photo: Ofer Hagiov

Uriel Lin, president of the Association of Chambers of Commerce: "The Bank of Israel is better off and will not be overly affected by the US interest rate hike policy.

Indeed, the US economy affects the entire world, but the conditions of the US economy, including the level of inflation, are different from the conditions of the economy in Israel. The Bank of Israel must wait with regard to further interest rate increases before the inflation trend in Israel becomes clear. It must be understood that these increases increase the costs of the business sector and will postpone The costs of products and services will even increase the cost of living. In any case, the Bank of Israel must not continue raising interest rates before finding a solution that prevents the burden on mortgage recipients from worsening in consultation with the Ministry of Finance."

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Source: israelhayom

All news articles on 2022-09-21

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