The Monetary Committee of the Bank of Israel decided Monday to leave the interest rate unchanged at 4.75 percent.
“Inflation is moderating, but is still above the target range,” the Bank said in a statement explaining the decision.
One-year inflation expectations and forecasts are within the target range, near the upper bound, the Bank said, adding that expectations derived from the capital market for the second year onward are also within the target range.
National Accounts data show that the level of GDP reflects a level of activity that is above the pre-COVID-19 trend line. “However, the pace of growth is below potential economic growth, total uses in the economy declined, and a number of indicators point to some moderation in growth,” the Bank noted.
The labor market remains tight and in a full employment environment, but the downward trend in the job vacancy rate continues.
The volume of activity in the housing market continues to moderate, the Bank said, noting that home prices declined in recent months and the annual pace of home price increases moderated to 5.2 percent. “The moderating trend in the number of purchases and in the volume of new mortgages continues,” the Bank said.
The shekel weakened by 2.3 percent against the US dollar, by 1.3 percent against the euro, and by 1.5 percent in terms of the nominal effective exchange rate since the last decision on interest rates.
The Bank added that the shekel’s depreciation in recent months is contributing to the increase in the inflation rate.