Israeli central bank holds key rate, cuts unlikely until 2025
Repeats due to technical problem
By Steven Scheer
JERUSALEM, Aug 28 (Reuters) -The Bank of Israel kept interest rates unchanged on Wednesday for the fifth-straight meeting, citing geopolitical uncertainty that has raised economic risks, along with rising inflation, and said rates would likely not fall further until 2025.
The central bank, worried about Israel's risk premium, which has risen since Israel's war against Hamas militants began on Oct. 7, left its benchmark rate ILINR=ECI at 4.50%. All 15 analysts polled by Reuters had expected no rate move.
"In view of the continuing war, the monetary committee’s policy is focusing on stabilizing the markets and reducing uncertainty, alongside price stability and supporting economic activity," the Bank of Israel said in a statement.
Policymakers expressed concerns over loosening fiscal policy as the war and geopolitical risks are being reflected in high yield spreads between Israeli government and U.S. bonds, and in credit default swap spreads that are near record levels.
The central bank had reduced the rate by 25 basis points in January after inflation eased and economic growth slowed amid the Gaza war, but kept policy steady in February, April, May and July.
Some analysts had believed that rates could go down further this year, with two more decisions on Oct. 9 and Nov. 25 but deputy governor Andrew Abir said that was unlikely.
"It's unlikely for us to be cutting rates until well into 2025," Abir told Reuters, noting that the decision remains data-dependent.
"As long as the uncertainty around the war (and) the dislocation in various key industries carries on, it's difficult for us to be able to reduce interest rates."
He said there were too many factors against a rate cut, such as rising inflation and the Gaza war, which has created supply disruptions and labour shortages. Those conditions have led to a higher budget deficit and the government has yet to present a credible 2025 state budget.
"Because of the fiscal situation, that leads us to being more cautious and conservative about monetary policy," Abir said. "And we think a higher level of interest is needed in order to keep the economy and markets stable."
Israel's annual inflation rate rose to 3.2% in July from 2.9% in the previous month, moving back above the government's 1%-3% target range after falling as low as 2.5% in February.
The economy grew an annualised 1.2% in the second quarter, slowing markedly from a 17.3% pace in the first quarter.
"The level of economic activity is lower than the trendline and even lower than its level in the corresponding quarter of 2023, and is greatly impacted by supply limitations," the bank said.
Reporting by Steven Scheer and Ari Rabinovitch; editing by Mark Heinrich, Sharon Singleton and Rod Nickel
면책조항: XM Group 회사는 체결 전용 서비스와 온라인 거래 플랫폼에 대한 접근을 제공하여, 개인이 웹사이트에서 또는 웹사이트를 통해 이용 가능한 콘텐츠를 보거나 사용할 수 있도록 허용합니다. 이에 대해 변경하거나 확장할 의도는 없습니다. 이러한 접근 및 사용에는 다음 사항이 항상 적용됩니다: (i) 이용 약관, (ii) 위험 경고, (iii) 완전 면책조항. 따라서, 이러한 콘텐츠는 일반적인 정보에 불과합니다. 특히, 온라인 거래 플랫폼의 콘텐츠는 금융 시장에서의 거래에 대한 권유나 제안이 아닙니다. 금융 시장에서의 거래는 자본에 상당한 위험을 수반합니다.
온라인 거래 플랫폼에 공개된 모든 자료는 교육/정보 목적으로만 제공되며, 금융, 투자세 또는 거래 조언 및 권고, 거래 가격 기록, 금융 상품 또는 원치 않는 금융 프로모션의 거래 제안 또는 권유를 포함하지 않으며, 포함해서도 안됩니다.
이 웹사이트에 포함된 모든 의견, 뉴스, 리서치, 분석, 가격, 기타 정보 또는 제3자 사이트에 대한 링크와 같이 XM이 준비하는 콘텐츠 뿐만 아니라, 제3자 콘텐츠는 일반 시장 논평으로서 "현재" 기준으로 제공되며, 투자 조언으로 여겨지지 않습니다. 모든 콘텐츠가 투자 리서치로 해석되는 경우, 투자 리서치의 독립성을 촉진하기 위해 고안된 법적 요건에 따라 콘텐츠가 의도되지 않았으며, 준비되지 않았다는 점을 인지하고 동의해야 합니다. 따라서, 관련 법률 및 규정에 따른 마케팅 커뮤니케이션이라고 간주됩니다. 여기에서 접근할 수 있는 앞서 언급한 정보에 대한 비독립 투자 리서치 및 위험 경고 알림을 읽고, 이해하시기 바랍니다.