ISRAEL
Analyst
Jonathan Katz
Former Chief Economist, Finance Ministry Budget DepartmentRecent Country Insights
Inflation in March slightly above expectations, but core remains low
ISRAEL · In Brief · 15 Apr 2024
Inflation in March slightly above expectations Inflation in March (0.6% m/m 2.7% y/y, following 2.5% last month) was slightly above expectations of 0.5% on average. Core inflation inched up to 2.3% y/y from 2.2% last month but this is due to higher taxation on cigarettes contributing 0.1% to the ...
Markets shrug off escalation
ISRAEL · Report · 15 Apr 2024
1. So far, markets appeared unfazed by the recent Iranian strike on Israel, including the equity, bond and FX markets. 2. The BoI kept rates unchanged at its most recent meeting due to current elevated geopolitical risks, but expects easing in the coming year. 3. The economy has recovered...
Local markets shrug off recent Iranian missile attack
ISRAEL · In Brief · 15 Apr 2024
Geopolitics: Iran launched a large-scale drone/cruise/missile attack on Israel Saturday night. Some 200 projectiles were fired, 99% were intercepted. Israel’s defense system performed exceptionally well, in addition to cooperation with other allies including the US, UK, and Jordan. The big questi...
Rates on hold, fiscal deficit pushes higher despite strong revenues
ISRAEL · In Brief · 08 Apr 2024
The Bank of Israel maintained present policy rates on hold at 4.5% on April 8 (market expectations were divided). In the press conference the Governor was clear that elevated geopolitical risks and FX stability were key to the decision: “In view of recent developments, which indicate a substantia...
Elevated uncertainty will postpone loosening
ISRAEL · Report · 08 Apr 2024
1. We expect a rate hold decision today on elevated conflict escalation risk and concern regarding expansionary fiscal policy. 2. Economic indicators point to a steady recovery, with construction and incoming tourism still below pre-war levels. 3. Exports of both high-tech services and indu...
The chances of a rate cut on Monday have diminished
ISRAEL · In Brief · 07 Apr 2024
Monetary policy: We have shifted our rate forecast today to hold, due to last week’s weaker shekel and elevated risk for escalation. In addition, we think the BoI is increasingly concerned about the expansionary fiscal policy. The BoI revised macro forecast is expected to reflect a higher fiscal ...
A rate cut next week appears likely, depending on the shekel
ISRAEL · Report · 01 Apr 2024
1. Credit card purchases remain elevated in March, suggesting robust consumer demand. 2. A rate cut appears likely next week, assuming a stable shekel. 3. Initial estimates for tax revenues in March point to another upward surprise.
Rate cut expected next week, assuming limited shekel volatility this week
ISRAEL · In Brief · 31 Mar 2024
Private consumption remains elevated Although domestic real credit card purchases declined by 2% in February, the level of purchases is 3.8% higher than the pre-war level in September (SA). Real-time data from the BoI point to 3% m/m growth in March. This high level of consumption is due in part ...
Despite concern about inflation, shekel appreciation may support lowering the interest rate
ISRAEL · Report · 25 Mar 2024
1. The shekel appreciated last week on optimism regarding a possible cease-fire. 2. Supply side disruptions, strong demand for housing rentals (compared to supply) and an accommodative fiscal policy pose inflationary threats 3. Nevertheless, assuming shekel stability, we see a likely rate c...