The Bank of Israel’s Monetary Committee decided Monday to leave the interest rate unchanged at 4.5 percent.
“In view of the continuing war, the Monetary Committee’s policy is focused on stabilizing the markets and reducing uncertainty, alongside price stability and supporting economic activity,” the Bank said in a statement.
“The interest rate path will be determined in accordance with the convergence of inflation to its target, continued stability in the financial markets, economic activity, and fiscal policy.”
Inflation in the past 12 months is 3.5 percent, above the upper bound of the target, and it is expected to increase in the coming months. Inflation expectations from the various sources for one year and beyond are within the target range, in its upper portion, the Bank said.
Since the last interest rate decision, the shekel has strengthened by 0.9 percent against the US dollar, by 6.4 percent against the euro, and by 3.7 percent in terms of the nominal effective exchange rate.
The economy grew by 3.8 percent in annual terms in the third quarter, but the negative gap relative to the trendline remains, mostly due to supply constraints. The most recent indicators of economic activity provide a mixed picture regarding the fourth quarter, with a slight tendency to weakening. The labor market remains relatively tight, despite some moderation in recent months.
In the housing market, the increase in home prices moderated. However, constraints on activity in the construction industry remain significant, the Bank said.
