Country Analysts

Jonathan Katz
Former Chief Economist, Finance Ministry Budget Department

Recent Country Insights

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Trade war escalation and shekel appreciation could delay tightening
ISRAEL - Report 13 May 2019
Recent data has been mixed, but mostly was positive, with consumer confidence moving higher. Data to be released this week: We expect inflation to accelerate to 1.5% y/y (from 1.4%) in April, and GDP growth to be robust in Q1 2019 (nearly 5% saar). Although accelerating inflation and strong growt...

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GDP growth expected to reach a robust 5% saar in Q1 2019
ISRAEL - Report 06 May 2019
Economic data released last week supports our assessment of robust growth in Q1 2019, likely to reach 5% saar. Exports of both merchandise and services were up sharply in Q1, employment growth was strong and new vehicle purchases surged before higher taxation. Robust growth strengthens our view t...

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A rate hike appears increasingly possible on May 20th
ISRAEL - Report 29 Apr 2019
We currently see a 50% probability of a rate hike on May 20th due to robust growth and accelerating inflation. We see inflation stabilizing at 1.5% y/y in April and in May. Netanyahu is working on a two-year fiscal scheme in 2020-2021 in order to support political stability through 2022. Hig...

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A rate hike cannot be ruled out in May
ISRAEL - Report 22 Apr 2019
Recent economic indicators point to fairly robust growth in Q1 2019, with exports rebounding, private consumption fairly steady and demand for new housing up. The last rate decision was a 4-1 vote, with all members noting the acceleration of the inflation environment. A rate hike in the next rat...

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Shekel appreciation likely to postpone tightening
ISRAEL - Report 15 Apr 2019
The shekel has appreciated by 4.8% YTD (against the basket), supportive of rate stability. Israeli institutions sold nearly 3bn USD in January-February, reversing their previous buying trend. Shekel appreciation and a rather dovish BoI Governor are likely to keep rates unchanged this year. Implic...

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Rate stability expected today, possibly with a more hawkish tone
ISRAEL - Report 08 Apr 2019
We expect a rate hold decision today but with a slightly more hawkish tone, noting robust growth in Q1 2019 and higher inflation expectations. Fiscal policy remains expansionary, and with rapid expenditure growth and weak revenues in Q1 2019, some form of fiscal consolidation is expected by the n...

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Rate hike likely at the end of May
ISRAEL - Report 01 Apr 2019
Most economic indicators point to some acceleration of growth in Q1 2019, to 3.5%-4% saar. This is above Israel's growth potential, estimated at 2.7% by the Bank of Israel. Inflation is expected to accelerate to 1.6% y/y in April (from the current 1.2%), making a rate hike on May 28 increasingly ...

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Data in early 2019 point to some acceleration
ISRAEL - Report 25 Mar 2019
Initial data for Q1 2019 point to some acceleration in activity, as underlined by the BoI Composite Index. Despite signs of improvement in growth we do not envision a rate hike this year, unless inflation surprises on the upside. Housing inventory is expected to increase in the coming quarters, s...

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Accelerating rental prices resulted in higher-than-expected CPI
ISRAEL - Report 18 Mar 2019
February's CPI (0.1% m/m, 1.2% y/y) surprised on the upside due to accelerating housing rental prices. Our inflation forecast for the NTM remains at the low end of the target (1.0%), on shekel strength and softening labor market pressures, offset in part by higher taxation. We still do not envisi...

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