Israeli Shekel Stabilizes After Sharp Decline Following Election Results
Translated & summarized from Calcalist by baba
The Israeli shekel stabilized against the dollar and euro following a sharp decline after election results. Globally, the US Federal Reserve kept interest rates unchanged and announced plans to reduce the number of FOMC rate-setting meetings. Analysts suggest this shift could lead to more volatile market movements.
The story in 5 lines · by baba
- The Israeli shekel stabilized after a sharp decline following election results.
- The dollar is trading slightly below 3.12 shekels, and the euro is above 3.47 shekels.
- The US Federal Reserve kept interest rates unchanged at 4%.
- The Fed will reduce the number of FOMC meetings where interest rates are voted on.
- Analysts predict potential for more extreme market movements due to the Fed's decision.
The Israeli currency market has stabilized after a sharp decline of the shekel yesterday, which was a direct reaction to the election results. The dollar is trading slightly below 3.12 shekels, and the euro is above 3.47 shekels.
Globally, the dollar index against major currencies remained unchanged at 102.2 points. The euro saw a 0.1% decrease, trading above $1.11, while the pound showed no significant change, trading above $1.33.
The US Federal Reserve maintained its interest rate at 4% yesterday, as anticipated. Attention is now focused on the upcoming interest rate decisions from the European Central Bank today and the Bank of Japan tomorrow, though no changes are expected from either.
During a press conference yesterday, Fed Chairman Kevin Warsh announced the bank's intention to reduce the number of meetings where the Federal Open Market Committee (FOMC) votes on interest rates. He stated that while eight meetings per year are currently suitable, one meeting in 2027 will be dedicated exclusively to broad monetary policy strategy, without interest rate votes or policy statements. Other meetings will remain standard policy-setting sessions. Warsh anticipates two strategy-focused meetings and six policy-setting meetings in 2028.
Following the announcement, Kerry Craig, Global Markets Strategist at J.P. Morgan Asset Management, commented that the meeting's outcome provided the market and the Fed time to review upcoming employment and inflation data. He suggested that as future policy tightening is already priced in, yields are likely to remain within a limited range unless clearer signals emerge for more aggressive tightening or rate cuts.
Analysts at TD Securities noted the potential effects of reducing annual interest rate decisions. They view the change in meeting formats for 2027 and 2028, with one and two meetings respectively dedicated to strategy discussions rather than policy changes, as a dovish signal. A possible consequence, they noted, could be more extreme market movements and more inter-meeting actions.
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