Bank of Israel Holds Interest Rate Steady After Three Cuts
Translated & summarized from 0404 by baba
The Bank of Israel's Monetary Committee decided to keep the interest rate at 3.25%, halting three consecutive cuts. This follows four rate reductions this year, bringing the rate down from 4.25%. The decision considers falling inflation but also rising U.S. bond yields, which could cause capital flight and weaken the shekel.
The story in 5 lines · by baba
- Bank of Israel holds interest rate at 3.25% after three prior reductions.
- The prime lending rate remains at 4.75%.
- Inflation is within the target range following a 0.5% drop in September.
- Rising U.S. bond yields are a key consideration for the committee.
- A rate cut could risk capital outflow and a weaker shekel.
The Monetary Committee of the Bank of Israel announced its decision to maintain the benchmark interest rate at 3.25%, pausing a series of three consecutive reductions. The prime lending rate also remains unchanged at 4.75%. This year, the Bank of Israel has lowered the interest rate four times, bringing it down from 4.25% to its current level. The most recent rate cut occurred in early September, defying market expectations at the time. The decision comes amidst a backdrop of moderating inflation, with the consumer price index falling by 0.5% in September, largely due to seasonal decreases in airfare and tourism. Annual inflation is now within the target range. However, rising U.S. bond yields present a counterbalancing factor. Officials are concerned that a further interest rate cut in Israel could potentially lead to capital outflow and weaken the shekel, whose strength has been instrumental in curbing price increases.
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