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COUNTRY INSIGHTS

Probability of a 0.5% rate hike next week has increased
ISRAEL · Report · 13 Feb 2023

1. Shekel weakening continues on the back of uncertainty regarding the implications of the planned judicial reforms. 2. If this trend continues this week, a 0.5% rate hike next week will become increasingly likely. 3. We expect a fiscal deficit of 3.7% GDP this year, following a surplus las...

Probability of a 0.5% rate hike next week has increased
ISRAEL · In Brief · 12 Feb 2023

Uncertainty regarding the judicial reforms continue Last week, the shekel weakened by 3.2% against the dollar and by 1.2% against the Euro. The shekel continued to weaken in the FX option trading yesterday. Several international investment banks and economists have expressed concern regarding the...

Private sector wage pressure continues
ISRAEL · Report · 06 Feb 2023

1. Bond yields declined, and the shekel appreciated, partially correcting for the recent sell-off, but both will continue to react to political developments. 2. Private sector wages continue to accelerate rapidly, while public sector pressure is mounting for a wage agreement. 3. Despite re...

Private sector wage pressure continues
ISRAEL · In Brief · 05 Feb 2023

Uncertainty regarding the judicial reforms continues Last week, the shekel strengthened and bond yields declined, partially correcting for the sell-off in the previous week. Several international investment banks have expressed concern regarding the proposed judicial reforms, including JP Morgan ...

Concern regarding the judicial reform rattles the markets
ISRAEL · Report · 30 Jan 2023

1. Growing concern regarding the proposed judicial reforms has supported a selloff of Israeli financial assets, including equities, bonds and FX. 2. Recent economic indicators point to slowing growth, including weaker private consumption. 3. Despite slowing growth, a weaker shekel will ...

Concern regarding the judicial reform rattle the markets
ISRAEL · In Brief · 29 Jan 2023

Financial markets in Israel have sold off recently Concern regarding capital outflows have resulted in a weaker shekel, lower equity prices and higher bond yields. This follows growing international (as well as domestic) concern regarding the proposed judicial reform which would strengthen politi...

Demand for workers slows, but remains elevated
ISRAEL · Report · 23 Jan 2023

1. The gap between job vacancies and the number of unemployed is gradually declining, but the labor market remains relatively tight. 2. Strong employment creation in December suggests that economic activity remains fairly steady. 3. In 2022, the BoI increased the Makam (T-bill) issuance sig...

Demand for workers slows, but remains elevated
ISRAEL · In Brief · 22 Jan 2023

T-bills issuance surges in 2022 In 2022 the BoI issued 235bn in Makam due to strong demand. This was 95bn above net Makam redemption. Parallel to this, the BoI reduced the daily commercial bank deposits by a net 71bn. This net absorption was necessary due to the public sector contribution to mone...

Signs of inflation moderation, except for rental prices
ISRAEL · Report · 17 Jan 2023

1. Inflation in December surprised slightly on the downside (up 0.3% m/m and 5.3% y/y), with core inflation softening to 5% from 5.3%. 2. Except for rental prices, which continue to accelerate, non-housing service prices and goods are decelerating. 3. Due to recent government measures to re...

Signs of inflation moderation, except for rental prices
ISRAEL · In Brief · 16 Jan 2023

December’s CPI surprised slightly on the downside Inflation in December reached 0.3% (below expectations for 0.4%) and 5.3% y/y (similar to rate last month). Core inflation moderated to 5.0% y/y from 5.3%. Housing rental prices (OER) accelerated to 6.3% y/y from 5.9% while other service prices mo...

Cost of living reduction plan released
ISRAEL · In Brief · 12 Jan 2023

A new program to reduce the cost-of-living was presented yesterday by the PM and Minister of Finance. This will include reducing the increase in electricity price to 2.5% (originally 8.2%), the water price by 1% (instead of 3.5%) and reducing the price on petrol by 1.3% (by reducing the excise ta...

Markets will be following fiscal policy closely
ISRAEL · Report · 09 Jan 2023

1. S&P has expressed concern regarding the political, geopolitical and fiscal policy of the new government. 2. Business sentiment remains strong, with some softening of future expectations. 3. Rapid wage growth in the business sector reflects a tight labor market; public sector wage increas...

Markets will be following fiscal policy closely
ISRAEL · In Brief · 08 Jan 2023

9.1.23 The Bond market: The S&P analyst in charge of Israel, Maxim Rybnikov, in an interview for Calcalist, expressed concern regarding the functioning of the new government and possible weakening of the judicial system. Political, geo-political and fiscal developments will be followed closely in...

A somewhat dovish 0.5% hike, but much concern regarding fiscal policy
ISRAEL · In Brief · 02 Jan 2023

A somewhat dovish 0.5% hike, but much concern regarding fiscal policy The Bank of Israel pushed rates higher today by 0.5% to 3.75%, as widely expected. The monetary statement had a more dovish tone than in the past regarding inflation, which remains broad-based and impacted by domestic demand bu...

Rates expected to increase by 0.5% on Monday
ISRAEL · In Brief · 30 Dec 2022

Rates expected to increase by 0.5% on Monday On Monday, January 2nd, the Bank of Israel is expected to raise policy rates by 0.5% to 3.75%. This is our expectation, as well as that of the majority of forecasters (according to Reuters), although we cannot rule out a more moderate hike of 0.25%. Wh...

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