Shekel appreciation likely to postpone tightening

ISRAEL - Report 15 Apr 2019 by Jonathan Katz

The shekel has appreciated by 4.8% YTD (against the basket), supportive of rate stability. Israeli institutions sold nearly 3bn USD in January-February, reversing their previous buying trend. Shekel appreciation and a rather dovish BoI Governor are likely to keep rates unchanged this year. Implications of the election results: a stable right wing/religious coalition is expected, but fiscal consolidation is likely to be minimal assuming Kachlon continues as MinFin. We expect a CPI print of 0.5% m/m (1.4% y/y) today, impacted by seasonal factors and higher petrol prices.

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