By www.CentralBankNews.info Israel’s central bank cut its policy rate by 25 basis points for the second time this month to 1.25 percent to “narrow the gaps between the Bank of Israel’s interest rate and the rates in major economies worldwide, in order to weaken the forces for appreciation of the shekel.”
The Bank of Israel (BoI) already cut its rate in a surprise move on May 13 when said it would interven in the foreign exchange markets to weaken the shekel which has appreciated in response to due to the start of natural gas production, rate cuts by other central banks, continued quantitative easing in major economies and moderate global growth.
In its statement today, the BoI said “the expansionary policy of central banks in major advanced economies is expected to continue, according to their announcements, in coming year as well.”
Other factors cited by the BoI include inflationary expectations that are slightly below the midpoint of the central bank’s target, a lower budget deficit that will moderate the growth in demand, mixed global growth and government measures in the housing sector that are expected to moderate demand in the housing market.
The BOI said it would continue to monitor economic developments and use its available tool to achieve price stability, encourage employment and growth, support the financial system and “in this regard will keep a close watch on developments in the asset markets, including the housing market.”
