Photo Credit: Adele Lipkin / TPS
Bank of Israel

The Bank of Israel announced Monday that it will keep the interest rate unchanged this month at 0.1 percent.

“Economic activity continues apace, and labor market data for November and the first half of December indicate an improvement in the employment indices,” the Bank said in a statement on its website.

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“However, the increase in the morbidity rate and in the infection coefficient due to the “Omicron” variant, increase the risk to activity and may have macroeconomic significance in accordance with their scope. These developments are leading to an increase in uncertainty regarding the intensity of economic activity in the short and medium term.”

Inflation in the past 12 months was 2.4 percent, the Bank said. Inflation expectations for the coming year and for the medium and long terms are within the target range.

Home prices have increased by 10.3 percent in the past 12 months, “a significantly higher rate than in recent years,” the Bank Said.

Since the previous interest rate decision, there has been increased volatility in the exchange rate, with the shekel weakening by 0.7 percent against the US dollar at the end of the period and by one percent against the euro.

The Bank predicts that GDP will grow by 5.5 percent in 2022, and by five percent in 2023.

“The Israeli economy’s process of recovery from the crisis continues. However, there are still challenges to economic activity,” the Bank noted.

“The Committee will therefore continue to conduct an accommodative monetary policy for a prolonged time, in accordance with the pace of growth, employment, and the path of inflation. This is in order to continue supporting the attainment of the policy targets and the economic recovery from the crisis, and to ensure the continued orderly functioning of the financial markets.”

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Hana Levi Julian is a Middle East news analyst with a degree in Mass Communication and Journalism from Southern Connecticut State University. A past columnist with The Jewish Press and senior editor at Arutz 7, Ms. Julian has written for Babble.com, Chabad.org and other media outlets, in addition to her years working in broadcast journalism.