Rate-hold decision expected, at least for now

ISRAEL - In Brief 01 Sep 2023 by Jonathan Katz
Rate-hold decision expected next week The main factor for the MPC will be recent inflation moderation. Both headline and core have moderated, including goods and services. Growth indicators point to steady but soft growth, relative to 2022. Private consumption growth remains weak and actually negative per capita (-0.7% for real credit card purchases in May-July). Although employment growth in the prime age group (25-64) was robust in July and the unemployment rate declined to 3.0% from 3.3% in June, the demand for workers (job vacancies) is declining rapidly. The MPC regards present rates as restrictive and is generally not keen on pushing rates up further. Therefore, a rate pause is to be expected next week, at least for now. Looking forward, the October 20th decision will depend on the Aug-Sept CPI prints and the direction of the shekel. We note that inflation in September y/y is expected to accelerate to 4.0% (from 3.3%), as well as core inflation, on base effects. Inflation: We currently expect inflation of 0.3% m/m in both August and September. Petrol prices increased by 1.5% today. September’s CPI will be impacted by a 3.5% price hike for the various educational fees (due to higher wages in this sector). Bonds: Bond issuance will continue to increase gradually in September, reaching weekly issuance of 1.8bn ILS, up from 1.6bn in August and 1.4bn in July. This gradual increase is in line with the MoF upward revision regarding the expected fiscal deficit this year from around 1% GDP at the beginning of the year towards 1.5%-2% at present. We note that that this is still a relatively low level of issuance in September, with redemptions expected to reach 9.8bn. Never...

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this or its contents.