The Governor of the Bank of Israel is expected to leave the interest rate in the economy unchanged

The Monetary Committee of the Bank of Israel, chaired by the Governor, Prof. Amir Yaron, Is expected today (Monday) to leave the basic interest rate in the economy unchanged, and this will continue to stand at 0.1% per year. Leaving the interest rate unchanged was predicted by most analysts.

Nevertheless, additional economic indicators will probably be added to the decision expected today, chief among them the decision to open the economy to trading starting yesterday, the lower-than-expected decline in growth in 2020 (minus 2.4% compared to the Bank of Israel’s forecast of minus 3.7%) and the increase in inflation expectations for the coming year. 1%).

The Bank of Israel attributes the inaccuracy in their growth forecast to 2020 to two factors: the higher-than-expected imports of cars during last December and the fact that the effects of the third closure were less dramatic than in previous closures.

Pilot to open malls launched (Photo: Avshalom Shashoni)

Today, in contrast to previous interest rate decisions, no growth forecast or interest rate forecast will be provided by the Bank of Israel’s Research Department. However, it is assumed that interest rates will not fall during 2021, but will not rise either (despite the partial recovery). Two points will rise during today’s interest rate decision – the continued recovery in the housing market, which is reflected in the rise in prices (4% in the past year, according to the January index), and the steps taken by the Bank of Israel to prevent the dollar from continuing to weaken.

The governor is expected to continue to support the exchange rate Even if foreign currency purchases are needed beyond the $ 30 billion limit announced at the beginning of 2021. Meanwhile, it was reported yesterday that the banks transferred last week – at the request of the Supervisor of Banks – the mortgage activity data following the governor’s directive. The bankers claim that they did not take advantage of the abolition of the prime interest rate limit to raise the spreads.
The banking system explains that however, following the increase in the allowable prime component in its mortgage, they have reduced the depth of subsidy enjoyed by the mortgage recipients.

The regulator was not convinced by the explanation given, and they argue that despite this the abolition of the prime limit should have led to the bottom line for a reduction in the overall interest rate. Probably as a result the banking system will have no choice, And banks will be required to lower mortgage rates at a rate that is supposed to reassure politicians.


Source: Maariv.co.il – כלכלה בארץ by www.maariv.co.il.

*The article has been translated based on the content of Maariv.co.il – כלכלה בארץ by www.maariv.co.il. If there is any problem regarding the content, copyright, please leave a report below the article. We will try to process as quickly as possible to protect the rights of the author. Thank you very much!

*We just want readers to access information more quickly and easily with other multilingual content, instead of information only available in a certain language.

*We always respect the copyright of the content of the author and always include the original link of the source article.If the author disagrees, just leave the report below the article, the article will be edited or deleted at the request of the author. Thanks very much! Best regards!