The Bank of Israel kept its benchmark interest rate unchanged at 4.5% on November 25, marking the seventh consecutive hold this year, as the central bank weighs inflationary pressures against geopolitical uncertainties, Globes reported.
The decision, which was in line with analysts' expectations, comes as financial markets have begun pricing in potential rate cuts for the second or third quarter of 2024, a shift from October when rate hikes were still being considered.
Annual inflation remained steady at 3.5% in October, with core inflation accelerating to 3.29% from 3.04%.
Bank of Israel Governor Professor Amir Yaron did not hold a press conference following the decision, but the central bank issued a statement explaining its monetary stance.
Harel Investment House projections suggest a slight decline in the November consumer price index of 0.1-0.2%, with stable prices expected in December, dependent on fuel costs. The investment firm forecasts 2.8% inflation over the next 12 months, assuming moderate fuel price decreases and slight shekel appreciation.
FRA derivatives, which price future interest rates, indicate markets are anticipating rate cuts as early as Q2 or Q3 2024, marking a significant shift from October's hawkish expectations. The outlook changed following positive September inflation data.
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