Israel Inflation Expectations Hold Steady at 2% for Next Year
Translated & summarized from Arab48 by baba
Bank of Israel data shows average inflation expectations for the next 12 months have stabilized at 2%, with slight increases in some capital market indicators. Longer-term and domestic interest rate-based expectations remained largely stable.
The story in 5 lines · by baba
- Inflation expectations for the next 12 months are stable at 2%.
- Capital market inflation expectations saw slight increases for years one, two, and three.
- Longer-term inflation expectations remained relatively stable.
- Domestic interest rate-based expectations held steady at 1.8%.
- Bank of Israel data includes inputs from banks, consultants, and market indicators.
Bank of Israel data released Wednesday indicates that the average inflation expectations among commercial banks and economic consulting firms for the next 12 months have stabilized at 2%. While this average remains steady, some other expectation indicators have seen a slight increase compared to August.
Expectations derived from the capital market show a modest rise for the first year, reaching 1.3% from 1.2% in August. For the second year, expectations climbed to 2% from 1.9%, and for the third year, they rose to 2.1% from 2%.
Longer-term expectations, however, remained relatively stable. Projections for the period between the third and fifth years stood at 1.8%, and for five years, also at 1.8%. Expectations for the period between the fifth and tenth years were recorded at 1.9%.
Annual expectations based on domestic interest rates remained at 1.8%. The average inflation forecast from predictors for one year ahead increased to 1.8%, up from 1.7% in August.
Bank of Israel explained that the 12-month inflation expectations are based on regular submissions from commercial banks and economic consultants. Other indicators are calculated from market prices, domestic interest rates, and the bank's analyses. Capital market expectations reflect the difference between yields on government bonds linked and unlinked to the cost of living index, also incorporating inflation risk premiums and liquidity differences.
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