{"id":132800,"date":"2018-08-29T11:56:27","date_gmt":"2018-08-29T15:56:27","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=132800"},"modified":"2018-08-29T11:56:27","modified_gmt":"2018-08-29T15:56:27","slug":"israel-maintains-rate-but-moves-step-closer-to-hike","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2018\/08\/israel-maintains-rate-but-moves-step-closer-to-hike\/","title":{"rendered":"Israel maintains rate but moves step closer to hike"},"content":{"rendered":"
August 29, 2018<\/div>
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By CentralBankNews.info<\/u><\/a>
\n     Israel’s central bank kept its key interest rate steady at 0.10 percent, as expected, but took another small step toward raising its rate for the first time in seven years by saying inflation now appeared to becoming entrenched within its target range, meeting its requirement for tightening monetary policy.
     While the Bank of Israel (BOI) reiterated its guidance that would keep its accommodative policy “as long as necessary in order to entrench the inflation environment within the target range,” it added that inflation was now “moving toward entrenchment within the price stability target range.”
      Today’s statement about inflation is more confident than in July when it said inflation was “approaching” its target range, and supports last month’s forecast by BOI staff that the key rate will rise to 0.25 percent this year and then 0.50 percent in 2019.
      The BOI has maintained its rate at 0.10 percent since wrapping up an easing cycle in March 2015 and last raised the rate in June 2011.
      Israel’s inflation rate rose to 1.4 percent in July from 1.3 percent in June, within BOI’s target range of 1.0 – 3.0 percent, and up from 0.5 percent in May.
      BOI acknowledged inflation was in the lower part of its target range and the main risk to inflation becoming entrenched within the range was a rise in the shekel’s exchange rate.
      The shekel has weakened this year against the U.S. dollar although it has firmed in the last few weeks. Today the shekel was trading at 3.61 to the dollar, down 3.6 percent this year.
     In July BOI staff forecast that inflation would average 1.2 percent this year, up from 0.3 percent in 2017 and up from 1.1 percent previously forecast, and then rise further to 1.5 percent in 2019, up from 1.4 percent previously forecast.
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      The Bank of Israel released the following statement:<\/p>\n