By CentralBankNews.info
Israel’s central bank held its benchmark interest rate steady at 0.75 percent, as expected, saying future rate changes depend on “developments in the inflation environment, growth in Israel and in the global economy, the monetary policies of major central banks, and developments in the exchange rate of the shekel.”
The Bank of Israel (BOI), which last month made a surprise 25 basis point cut in its policy rate, said inflation was within the bottom range of the central bank’s target range and it is likely that over the next several months it could fall below the range temporarily though it is expected to return to within the target range toward the beginning of 2015.
Israel’s inflation rate fell to 1.2 percent in February from 1.4 percent in January. The BOI targets inflation of 1.0 percent to 3.0 percent. In April and May last year, inflation fell below 1.0 percent. In 2013 the BOI cut its rate by 75 basis points.
The BOI’s rate cut last month was in reaction to the surprise fall in January inflation, pessimism among consumers and continued strength in the shekel.
Despite the further decline in inflation in February, the BOI said private forecasters’ inflation projections were unchanged at an average of 1.6 percent over the next 12 months. Private forecasters do not expect the BOI to change rates in the next three months.