Israel's central bank keeps base interest unchanged at 0.25 pct

Source: Xinhua| 2019-07-08 23:38:25|Editor: Mu Xuequan
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JERUSALEM, July 8 (Xinhua) -- The base interest rate in Israel remained at 0.25 percent, the Israeli Central Bank announced on Monday.

Although the inflation rate in Israel stabilized within the government target (1 to 3 percent), the unchanged interest rate in Europe, the possibility of interest rate cut in the U.S. and signs of global slowdown led to the Bank of Israel's decision not to change the rate.

Israel's interest remained at 0.25 percent since November 2018, when it changed for the first time in over 3.5 years (and raised for the first time in 7.5 years) from 0.1 to 0.25 percent.

In its announcement, the Bank of Israel also expects one rate increase at the end of the third quarter of 2019 to 0.5 percent, and two increases in 2020 to 1 percent.

In the past 12 months, inflation in Israel has reached 1.5 percent, for the first time since 2013, with a relatively significant contribution of the volatile fruit and vegetable component.

According to the Bank's forecasts, inflation will not fall in the direction of the lower limit of the target, but will increase to 1.6 percent in 2020.

The Bank of Israel also revised its GDP growth forecast for the Israeli economy down to only 3.1 percent in 2019, 0.1 percent lower than the previous forecast.

The slight decline in the forecast is linked to the slowdown in world trade, which is expected to affect exports.

In addition, the forecast for the increase in Israeli exports was revised downward from 4 percent to only 3.5 percent.

According to the Bank of Israel's announcement, "the decision to advance the general elections and the uncertainty regarding the measures taken by the future government to reduce the deficit increases the uncertainty regarding developments in the local economy."