Tightening labor market and strong growth support higher rates

ISRAEL - Report 07 Feb 2022 by Jonathan Katz

1. Despite Omicron, economic data in January was generally positive, including the latest business survey and employment growth.

2. Credit growth was rapid in 2021, especially household credit for housing, and this will increasingly become a consideration for monetary policy.

3. We have revised our inflation forecast upwards to 1.9% this year, on the back of the recently weaker shekel and higher energy costs.

4. We maintain our call for a rate hike on April 11; recent data has strengthened our call.

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