Last rate hold decision was a 5-1 vote

ISRAEL - In Brief 09 Mar 2020 by Jonathan Katz
The last rate hold decision was a 5-1 vote by the MPC, with 5 members of the opinion that growth is at potential, the labor market tight and inflation expected to reach the lower end of target in about one year. These five were in favor of continued FX intervention as the necessary tool, in light of downside global risks and low inflation. One member was in favor of a rate cut to 0.1% noting that the cumulative shekel appreciation will hurt growth and dampen inflation. He also stressed the tight fiscal position, and global downside risks.This decision was taken on February 24th when the MPC was expecting the impact of the virus to be limited to China and also short-lived (Q1). It appears now to have spread considerably and this increases the chances of a rate cut on April 6th. We cannot rule out a rate cut even earlier, depending on global developments. Last week the MPC noted that such as a move was considered but decided it was not necessary as growth appears fairly steady and markets fairly stable. Since then, conditions appear to have worsened considerably.

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