Bank of Israel Rate Hike Pushed Back on Weak Inflation: Survey

The headquarters of Israel's central bank stands in Jerusalem.

Photographer: Ariel Jerozolimski/Bloomberg

Economists expect the Bank of Israel to delay its rate hike further as consumer prices dipped back below zero in recent months, according to a new Bloomberg survey.

The central bank is now expected to keep rates on hold until mid-2018, from an expected first-quarter hike in last months’ poll. Inflation forecasts for this year fell to 0.5 percent and to 0.9 percent in 2018, from 0.7 percent and 1.2 percent, respectively.

Key Takeaways

  • Survey of 13 economists conducted from Aug. 25 to Aug. 30
  • 2017 GDP forecast at +3.2% y/y versus prior survey +3.4%
  • 2017 CPI forecast at +0.5% y/y versus prior survey +0.7%
    • 2018 CPI forecast at +0.9% y/y versus prior survey +1.2%
  • The Bank of Israel will hike rates in 3Q18 versus 1Q18 previously
  • See graph of GDP forecasts

Full Survey Results

Avg.Avg.Avg.
201720182019
GDP YOY%3.2%3.4%2.9%
 Previous survey3.4%3.3%n/a
CPI YOY%0.5%0.9%1.0%
 Previous survey0.7%1.2%n/a
Unemployment rate4.3%4.4%n/a
 Previous survey4.2%4.2%n/a
Current Acct. % GDP3.5%3.4%n/a
 Previous survey3.8%3.6%n/a
Budget as a % GDP-2.6%-2.5%n/a
 Previous survey-2.7%-2.7%n/a
3Q4Q1Q2Q3Q4Q
201720172018201820182018
Base Rate0.10%0.10%0.10%0.10%0.25%0.50%
 Previous survey0.10%0.10%0.25%0.38%0.50%0.50%

NOTE: All figures are expressed as of the end of the quarter except for GDP.

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