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COUNTRY INSIGHTS

Deflation and renewed closure likely to support further loosening
ISRAEL · In Brief · 21 Sep 2020

Highlights of the Weekly Israel Macro Wrap Up 21.9.20 Inflation surprises on the downside Inflation remained stable m/m in August below market expectations of 0.2% m/m. Inflation in August declined to -0.8% y/y (from -0.6% in July). Core inflation move lower to -0.5% y/y (from -0.4% in July). Eig...

Inflation in August surprises on the downside
ISRAEL · In Brief · 15 Sep 2020

The CPI remained stable (0.0% m/m) in August and declined by 0.8% y/y (from -0.6% y/y in July). Market expectations (and ours) were for a higher CPI of 0.2% m/m.There was no one factor explaining this low print, eight out of the ten major CPI items witnessed lower or stable prices. Domestic vacat...

Market pessimism on the back of plans for renewed lockdown
ISRAEL · Report · 14 Sep 2020

The expected second closure is expected to slow growth, increase unemployment and push the fiscal deficit higher. The impact on inflation is expected to be minimal as weaker PC demand is offset by a slightly weaker shekel. Slowing growth supports further expansionary monetary policy, an issue dis...

CA surplus reaches 4.6% GDP in Q220
ISRAEL · In Brief · 14 Sep 2020

Fundamentals continue to support a strong shekel The CA surplus in Q220 increased to 4.4bn USD from 3.5bn in Q120 and 4.0bn one year ago. This improvement was due to a decline in the trade deficit and an increase in the service surplus. During the Covid crisis, merchandise imports declined more r...

Market pessimism on the back of plans for renewed lockdown
ISRAEL · In Brief · 13 Sep 2020

Highlights of the Israel Weekly Macro Wrap Up Recent positive indicators likely to be temporaryWith Israel likely to enter a renewed closure (whether partial or total, it is still unclear), economic activity is likely to decelerate.We currently expect GDP growth to reach -5.5% this year (previous...

FX intervention accelerates, additional monetary tools likely
ISRAEL · In Brief · 08 Sep 2020

The BoI purchased 2.56bn USD in August and 14.1bn YTD in order to slow shekel appreciation. The shekel appreciated by 1.1% in August (against the basket) and by 2.7% YTD. Appreciation is supported by a CA surplus (which apparently improved in Q3 due to the lack of flights abroad), net FDI, foreig...

Fiscal deficit reaches 8.1% GDP LTM, tax revenues surge in August
ISRAEL · Report · 07 Sep 2020

Domestic demand improved in August, but renewed closure likely: • Weekly credit card purchases increased by 3.8% m/m in August, both due to summer seasonality but in addition the fact that Israelis remain home this summer is private consumption supportive. • Consumer confidence improved in Augu...

Fiscal deficit reaches 8.1% GDP LTM, tax revenues surge in August
ISRAEL · In Brief · 06 Sep 2020

Highlights of Weekly Israel Macro Wrap Up 7.9.20 Domestic demand improved in August, but renewed closure likely: Weekly credit card purchases increased by 3.8% m/m in August, both due to summer seasonality but in addition the fact that Israelis remain home this summer is private consumption suppo...

The BoI expects zero or negative inflation one year ahead
ISRAEL · Report · 31 Aug 2020

Private consumption indicators point to above summer seasonal growth, as Israelis are not traveling abroad. Stronger PC growth will be a factor supporting a lower-than-expected fiscal deficit. The BoI expects extremely low inflation in the coming year, relative to market expectations.

The BoI expects zero or negative inflation one year ahead
ISRAEL · In Brief · 30 Aug 2020

Highlights: of the Weekly Israel Macro Wrap Up 31.8.20 Monetary policy: Policy rates remained stable at 0.1%, with no adjustment in the forward guidance. More interesting was the Bank of Israel macro forecast which expects inflation much lower than market expectations or that of major forecasters...

Rates remain stable at 0.1% , FG unchanged
ISRAEL · In Brief · 24 Aug 2020

Policy rates remained stable at 0.1% today with the monetary statement stressing the strong impact of the Covid crisis on the level of GDP in Q220 estimated at -11%, especially weighing on private consumption and investments. The inflationary environment remains low (-0.6% y/y) and the shekel has...

Rate stability likely today, but further accommodation possible
ISRAEL · Report · 24 Aug 2020

Highlights: Monetary policy: We do not expect a policy rate change today, but we cannot rule out some additional accommodation. This could take the form of the ECB style LTRO at a negative interest rate, under the condition that these loans are passed on to the private sector. The Bank of Isra...

Rate stability likely today, but some form of further accommodation possible
ISRAEL · In Brief · 23 Aug 2020

Monetary policy: We do not expect a policy rate change today, but we cannot rule out some additional accommodation. This could take the form of the ECB style LTRO at a negative interest rate, under the condition that these loans are passed on to the private sector. The Bank of Israel is under pre...

Underlying (core) inflation remains low, rental prices moderate
ISRAEL · Report · 17 Aug 2020

Highlights: July’s CPI surprised slightly on the upside (0.2% m/m, vs. 0.1% expected). Inflation is down 0.6% y/y, and core inflation is down 0.37% y/y. Housing rental (equivalent) prices moderated to 1.4% y/y (from 1.7% last month). The PPI (excluding energy) is down 1.8% y/y...

Underlying (core) inflation remains low, rental prices moderate
ISRAEL · In Brief · 16 Aug 2020

Highlights of Weekly Israel Macro Wrap Up 17.8.20July’s CPI surprised slightly on the upside (0.2% m/m, vs. exp. 0.1%)Inflation is down 0.6% y/y and core inflation is down 0.37% y/y.Housing rental (equivalent) prices moderated to 1.4% y/y (from 1.7% last month).The PPI (excluding energy) is down ...

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