Rates move 0.5% up to 4.25%

ISRAEL - In Brief 20 Feb 2023 by Jonathan Katz
The Bank of Israel raised rates by 0.5% noting that growth remains robust (with some softening of business expectations), the labor market tight (with some moderation in recent months). The BoI noted the increased volatility the shekel exchange rate. Inflation remains broad-based, and inflation expectations from all source have moved higher. There were no real surprises in this announcement. The emphasis on the shekel (slightly more than usual) is a hint that tightening was influenced by the recent increase in volatility (which in our opinion is clearly due to the uncertainty regarding the proposed judicial reform). In our opinion, unless a reasonable compromise on this issue is reached, shekel weakness will continue, as well as further tightening.

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