ISRAEL

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Country Analysts

Jonathan Katz
Former Chief Economist, Finance Ministry Budget Department

Recent Country Insights

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Growth remains steady, supportive of rate stability
ISRAEL - Report 27 Jan 2020
The Composite Index of the BoI points to steady growth in line with potential. Other indicators (PC and manufacturing) appear softer, but service exports remain robust. The signal from the BoI is that a rate cut is unlikely as long as growth remains steady and the Fed remains on hold, with FX int...

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Growth remains steady, supportive of rate stability, but FX intervention to continue
ISRAEL - In Brief 26 Jan 2020
Highlights: The Composite Index of the BoI points to steady growth.This index increased by 0.26% m/m in December, similar to months previous.In Q419 this index increased by 3.2%, in line with long-term growth potential.The MPC sees this as a factor supportive of rate stability, and therefore pref...

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The BoI prefers FX intervention to lower rates
ISRAEL - Report 20 Jan 2020
Inflation reached 0.6% in 2019, both headline and core. • Housing (rental) prices continue to be the main driver of inflation, up 2.1% y/y (the larger housing item, making up 25% of the basket). • Clearly the 8.3%-shekel appreciation against the basket was the main factor supporting low inflati...

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The BoI prefers FX intervention to lower rates
ISRAEL - In Brief 19 Jan 2020
Inflation reached 0.6% in 2019, both headline and core.Housing (rental) prices continue to be the main driver of inflation, up 2.1% y/y (the larger housing item, making up 25% of the basket).Clearly the 8.3%-shekel appreciation against the basket was the main factor supporting low inflation in 20...

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Inflation way below target in 2019, but expected to rise this year
ISRAEL - In Brief 15 Jan 2020
Inflation reached 0.0% m/m in December, coming in at the low end of expectations (0.0%-0.1%). Inflation y/y reached 0.6%, up from 0.3% last month. Core inflation (the CPI excluding energy and fresh produce) moved slightly higher to 0.64% y/y in December from 0.51% in November. Despite this low he...

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Higher bond issuance was offset by stronger consumer savings
ISRAEL - Report 13 Jan 2020
The fiscal deficit of 3.7% of GDP in 2019 necessitated doubling the net bond issuance, but this was facilitated by stronger household savings. Rates remained on hold, with a strong message that FX intervention is currently the BoI preferred tool. We expect December's CPI to reach 0.1% m/m (0.7% y...

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Weekly highlights: Higher bond issuance in 2019 was offset by stronger consumer savings
ISRAEL - In Brief 12 Jan 2020
The fiscal deficit reached 3.7% GDP in 2019. The deficit level has been stable during the past few months. The deficit overshot target by 12bn, with spending overshooting the original budget by 2.8bn and revenues below target by 9.2bn.We expect the deficit to remain at a similar level in 2020, an...

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Rates remain on hold and the bias remains dovish
ISRAEL - In Brief 10 Jan 2020
As expected, the BoI left the rate unchanged, but the interest-rate announcement came in a little bit more dovish than expected. The announcement stressed the low-inflation environment and the difficulties to return inflation back to the target range amid the strengthening of the shekel. The use ...

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The fiscal deficit reached 3.7% GDP in 2019
ISRAEL - In Brief 06 Jan 2020
The fiscal deficit in 2019 exceeded the planned deficit by 12bn ILS, due to a 9.2bn undershooting of revenues and a 2.8bn overshooting in spending. Expenditures of government ministries increased by 6.3% y/y, above the original planned budget of 5.1% growth in spending.Tax revenues were up 3.5% i...

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