By www.CentralBankNews.info Israel’s central bank cut its policy rate by 25 basis points to 1.0 percent due to inflation below the midpoint of the bank’s target range, slower-than-expected domestic growth, a possible slowdown in advanced economies and continued appreciation of the shekel currency.
The Bank of Israel (BOI), which has now cut rates by 75 basis points this year – including two cuts in May to stem the rise in the shekel – cut its forecast for growth this year to 2.6 percent from a previous forecast of 2.8 percent, excluding the contribution of natural gas production from the new Tamar site.
Including gas production, Israel’s Gross Domestic Product is forecast to expand by 3.6 percent this year, down from 3.8 percent in the previous forecast.
Next year, Israel’s economy is expected to slow down from this year due to a smaller contribution of gas output to economic growth, a decline in the growth of public spending and lower growth in private consumption due to higher taxes, the BOI said.
GDP in 2014 is forecast to grow by 2.7 percent, up from a previous forecast of 2.5 percent, excluding gas output. Including gas output, Israel’s economy is forecast to growth by 3.4 percent, up from a previous forecast of 3.2 percent.
