Israel holds rates as multiple conflicts push up inflation
The bank kept its benchmark rate at 4.5%
ISRAEL’S central bank left interest rates unchanged even as it lowered economic growth forecasts, with the conflicts in Gaza and Lebanon causing inflationary pressures and preventing the country from joining a global easing cycle.
The bank kept its benchmark rate at 4.5 per cent on Wednesday (Oct 9), in line with the forecasts of all economists surveyed by Bloomberg. It was the monetary committee’s sixth straight hold.
Inflation accelerated to 3.6 per cent year-on-year in August, above the government’s 1 per cent-3 per cent target range, as government spending to fund the war effort surges. At the same time, industries from tourism to agriculture and construction have slumped.
The central bank lowered its estimate for growth this year to just 0.5 per cent from 1.5 per cent, and for next year to 3.8 per cent from 4.2 per cent.
“Supply restrictions in the labour market, mainly due to a shortage of non-Israeli workers and to those absent due to their serving in the reserves, continue to weigh on economic activity,” governor Amir Yaron said. He called on the government to take steps to enable Palestinian workers – most of who have been barred from entering Israel from the West Bank since Hamas’ attack from Gaza last year – to return to the construction industry. BLOOMBERG
Share with us your feedback on BT's products and services
