Rate stability likely today, but further accommodation possible

ISRAEL - Report 24 Aug 2020 by Jonathan Katz

Highlights:

Monetary policy: We do not expect a policy rate change today, but we cannot rule out some additional accommodation. This could take the form of the ECB style LTRO at a negative interest rate, under the condition that these loans are passed on to the private sector. The Bank of Israel is under pressure to do more, and has expressed disappointment regarding fiscal support for businesses.

In addition, the Bank of Israel will give more detail regarding their revised GDP forecast of -4.5% in 2020 (revised from -6% in June). This is mostly due to the lower-than-expected contraction in the Q220.

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