The Bank of Israel Monetary Committee announced Monday that it has decided to leave the interest rate unchanged at 4.75 percent.
“We are in the eighth week of the “Swords of Iron” War,” noted BOI Governor Amir Yaron.
“Beyond the security issues, the war has marked economic ramifications, which impact on real activity and on the financial markets.
“We at the Bank of Israel and the Monetary Committee are utilizing a range of tools that are available to us in order to assist the economy and the public in Israel to get through this period and reach the optimal starting point for the day after.
Yaron noted that the current extent of economic uncertainty is related to the security situation, and to how the war will develop at the front.
“In view of these, and in accordance with the information that has been collected since the previous decision, the Research Department has updated its macroeconomic forecast,” he said.
“I want to reiterate that Israel’s economy is robust and stable,” Yaron added. “It has known how to recover from more than a few difficult periods in the past and to return rapidly to prosperity.
“The economy’s growth drivers are able to adjust to various situations. Among these growth drivers are innovation and technology, in which we are global leaders.”
“Inflation remains above the target range … As we noted in the interest rate decision, the Monetary Committee’s policy is focused on the stabilization of the markets and the reduction of uncertainty, alongside price stability and support for economic activity.
“With the eruption of the war, we took several steps with the goal of ensuring the full and orderly functioning of the markets. These programs have succeeded in generating stability so far in the foreign exchange and financial markets. The high level of the Bank of Israel’s foreign exchange reserves, which was approximately $200 billion just before the war, gives us a range of activity for maintaining the stability in the markets, while reducing the uncertainty at this time.
“In addition, with the agreement of the banking system, we expanded the assistance framework to banking system customers residing in the North as well as the South.”
The frameworks enable populations adversely impacted directly by war damage, as well as reserve soldiers, to defer without interest or fees the repayments on loans or mortgages, and to be eligible for other benefits.
The Bank also decided to implement a program of extending low-cost credit to small and micro companies at a scope of NIS 11 billion, through the banking system and through nonbank entities, he added.