Trade war escalation and shekel appreciation could delay tightening

ISRAEL - Report 13 May 2019 by Jonathan Katz

Recent data has been mixed, but mostly was positive, with consumer confidence moving higher. Data to be released this week: We expect inflation to accelerate to 1.5% y/y (from 1.4%) in April, and GDP growth to be robust in Q1 2019 (nearly 5% saar). Although accelerating inflation and strong growth are rate hike supportive, the recent escalation in the global trade war and shekel appreciation could delay BoI tightening.

Highlights:

Mixed data was released last week, although it was mostly positive.

- The Poalim Consumer Confidence Index has improved in the past three months and is approaching record levels.
- The CBS business tendency survey is pointing to acceleration.
- Credit card purchases increased by 4.1% saar in Q1 2019.
- Wages are up 4.0% y/y in the private sector.
- On the downside: The BoI Company survey suggests slowing growth in Q1 2019.

The fiscal deficit reached 3.8% LTM through April from 3.4% in March.

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