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Weakening shekel due to escalation concerns is the main BoI consideration
ISRAEL · Report · 23 Oct 2023

This report was written prior to the Bank of Israel’s October 23, 2023 rate-hold decision, which we forecast in the report. Geopolitics: Last week witnessed further skirmishes in Israel’s North against Hizballah, with mortar fire into Israel and attempts to penetrate Israel so far resulting i...

Weakening shekel due to escalation concerns is main BoI consideration
ISRAEL · In Brief · 22 Oct 2023

Geopolitics: Last week witnessed further skirmishes in Israel’s North against Hizballah with mortar fire into Israel and attempts to penetrate Israel so far resulting in the killing of nearly 20 Hizballah terrorists and a few Israeli casualties as well. On Sunday, Israel bombed two airports in Sy...

Unemployment remains low, for now
ISRAEL · In Brief · 18 Oct 2023

Unemployment remained low and stable in September at 3.2% (sa). Nevertheless, the employment ratio to the working age population declined to 61.4% from 61.6% last month. In other words, unemployment remained steady due to a slight decline of both the number of employed and of the labor participat...

A sharp rate cut (if any) next week appears off the table
ISRAEL · In Brief · 17 Oct 2023

Deputy Governor Andrew Abir spoke with the macro forecasters today, stressing the importance of market stability over other central bank goals (at present). It was clear from his words and the following statement, that a sharp rate cut on Monday is off the table (we cannot rule out a minor 0.25% ...

A rate cut appears imminent
ISRAEL · Report · 16 Oct 2023

1. We expect rates to decline by 0.5%-0.75% by next week in an effort to support the economy due to the sharp decline in activity. 2. Inflation in September surprised on the downside, declining to 3.8% y/y from 4.1%, and will facilitate monetary easing. 3. The recent outbreak of hostilities...

BoI to sell FX, reduces likelihood of further tightening
ISRAEL · In Brief · 09 Oct 2023 · 1 response

The Bank of Israel announced a program to sell up to $30 billion in foreign exchange. The Bank will operate in the market during the coming period in order to moderate volatility in the shekel exchange rate and to provide the necessary liquidity for the continued proper functioning of the markets...

Economic indicators remain mixed
ISRAEL · Report · 02 Oct 2023

1. The labor market continues to tighten, with unemployment down sharply. 2. August witnessed an improvement in private consumption growth. 3. Other indicators point to slowing growth, both in service and manufacturing exports. 4. Without an upward inflation surprise or sharp shekel...

Signs of growth deceleration
ISRAEL · In Brief · 27 Sep 2023

High-tech service export growth appears to have stalled. In July, high tech service exports (Israel’s main economic driver making up 8% of GDP including all computer services) declined by 0.9% m/m following growth of 1.8% in June. Annual growth in May-July was only 0.5% saar following growth of 2...

The shekel will react to progress surrounding a possible Saudi deal
ISRAEL · Report · 26 Sep 2023 · 1 response

1. The shekel appreciated last week, in part due to optimism regarding a possible normalization of relations with Saudi Arabia. 2. If this trend continues it will increase the chances of a rate-hold decision on October 23. 3. The labor market remains tight, with unemployment down and job va...

The shekel will react to progress surrounding a possible Saudi deal
ISRAEL · In Brief · 26 Sep 2023

Geopolitics: Last week, the shekel appreciated by 0.7% against the basket of currencies, despite declining global equities (usually correlated with shekel weakness as institutions must purchase FX in order to maintain their FX exposure target). This appreciation is due in part to increasing optim...

Demand for labor increases slightly + low housing inventory supports rental price inflation
ISRAEL · In Brief · 20 Sep 2023

Demand for new workers (job vacancies) increased slightly in August by 1% m/m to 119k) following a steady decline since July 2022 (151k). This is the first reversal (albeit modest) in the downward demand for new workers, and this supports our assessment that growth remains fairly steady and the l...

The last rate hold decision was unanimous, despite concern regarding shekel depreciation
ISRAEL · In Brief · 19 Sep 2023

The last rate hold decision was unanimous but shekel depreciation is worrisome for the MPC. In the protocol of the decision: “the depreciation of the shekel continues to be a significant factor delaying the convergence of the inflation rate back to the target, the shekel depreciation in recent mo...

A strong CPI print increases the likelihood of another hike
ISRAEL · Report · 18 Sep 2023

1. Inflation in August surprised on the upside as service price inflation remains elevated. 2. The CA surplus + net FDI fundamentals remain net positive but contracted compared to 2022. 3. Policy rates will most likely move higher in October.

Inflation in August surprises on the upside
ISRAEL · In Brief · 15 Sep 2023

Inflation in August surprises on the upside The CPI in August was up 0.5% m/m (expectations were in the 0.3%-0.4% range) accelerating to 4.1% y/y from 3.3% in July due to a strong base effect. Core inflation (the CPI excluding energy and fresh produce) accelerated to 3.9% from 3.6%, and excluding...

Macro fundamentals remain shekel positive
ISRAEL · In Brief · 14 Sep 2023

Macro fundamentals remain shekel positive The current account surplus declined slightly in Q2 to 4.2bn USD (sa) from 5.0bn in Q1, but more importantly, the goods/services account surplus increased slightly to 3.1bn from 3.0bn (excluding the primary income which has less of a direct impact on FX f...

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