Bank of Israel holds rates, can't cut again while inflation rising
JERUSALEM -The Bank of Israel held short-term interest rates steady on Monday for the third straight meeting, citing rising price pressures, a rebound in economic activity and continued geopolitical uncertainty resulting from Israel's war with Hamas in Gaza.
"All these parameters are putting more of a burden on the process of interest rate normalisation because we are determined to not allow inflation to diverge," Yaron told Reuters.All 15 analysts polled by Reuters had expected no change in rates on Monday and many economists believe the rate could stay put for the rest of 2024.
"In view of the war, the monetary committee’s policy is focusing on stabilizing the markets and reducing uncertainty, alongside price stability and supporting economic activity," the bank said.was flat versus the dollar at 3.675, having strengthened from 3.83 to the dollar a month ago due to expectations of a delay in the monetary easing cycle.
Morgan Stanley economist Alina Slyusarchuk said a 25 basis point rate cut could come in November with another 100 basis points in 2025."The risks to our call are skewed to a delay, with the chance the cutting cycle would resume in 2025 only," she said.
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