Country Analysts

Jonathan Katz
Former Chief Economist, Finance Ministry Budget Department

Recent Country Insights

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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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Steady CA surplus (2.9% of GDP in 2018) and strong FDI are shekel positive
ISRAEL - Report 11 Mar 2019
The CA surplus reached 11bn USD (2.9% of GDP) in 2018 and net FDI an additional 4.2%: macro fundamentals remain shekel positive. Israeli saving institutions reversed their demand for FX demand and sold 1.7bn USD in January 2019. The fiscal deficit surprised on the upside in February, reaching 3.5...

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According to BoI research, shekel appreciation is expected to slow inflation
ISRAEL - Report 04 Mar 2019
Recent PC indicators point to some deceleration, supportive of weak inflationary pressure. Policy rates will remain stable at 0.25% as the MPC aims to push inflation towards 2%. Despite steady growth in Israel at its potential growth rate, the MPC sees global downside risks. A BoI research paper ...

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Rate hold decision today on new forward guidance aiming for 2% inflation
ISRAEL - Report 25 Feb 2019
Recent economic indicators point to steady growth near potential (3%) at end-2018. Nevertheless, some slack in the labor market and the sharp decline in the PMI point to softer growth ahead. We expect a rate hold decision today, on the new forward guidance aiming for 2% inflation. Foreigners wer...

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Despite January's upward CPI surprise, rates to remain on hold
ISRAEL - Report 18 Feb 2019
Although January's CPI surprised on the upside, the inflation environment remains fairly tame. We expect inflation to reach 1.1% in the NTM impacted by a strong shekel and weakening wage pressure offset by tax increases and higher housing rental prices. GDP growth reached 3.1% saar in Q418, in...

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January's fiscal data is expected to impact the bond market
ISRAEL - Report 11 Feb 2019
Robust wage growth remains a factor supportive of some inflationary pressure. On the other hand, the shekel continues to appreciate, moderating inflationary pressure. Higher rental prices and likely tax hikes following the election will be the main factors contributing to inflation this year (we ...

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Rate hike unlikely before 2020
ISRAEL - Report 04 Feb 2019
Recent data point to some increasing slack in the labor market. In addition, private consumption demand appears to be slowing. Lastly, the shekel continues to appreciate against both the dollar and the Euro. These are all factors supporting low inflation and therefore, rate stability as well, thr...

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Growth appears steady in Q418 at around 3%
ISRAEL - Report 28 Jan 2019
Several economic indicators point to steady growth in Q418 of 3%, near Israel's long term growth potential. The Bank of Israel sees the economy running at full capacity, which explains the rapid growth in imports. Nevertheless, the emphasis of policy is currently on pushing stronger inflation tow...

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Underlying inflation remained fairly subdued in 2018
ISRAEL - Report 21 Jan 2019
Inflation remained below target in 2018 for the fifth straight year, reaching 0.8% y/y. Core inflation reached 0.7% similar to last year, despite a weaker shekel and wage pressure. We expect inflation in 2019 to reach 1.1%, assuming fiscal consolidation following the elections spills over to inf...

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