surprise: The Bank of Israel decided today (Monday) to lower the interest rate for September by 0.25% to a historic low of 0.25%.
Most market analysts expected that the bank's monetary committee would leave the interest rate unchanged, given the strengthening of the dollar against the shekel and the continued rise in housing prices.
Last month, the bank cut interest rates by 0.251% to a 5-year low.
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Among the main reasons that led the bank to this dramatic decision are inflation data.
The bank's statement said: "Inflation in the past 12 months fell to a rate of 0.31%, and expectations continued to decline for all ranges. Forecasters' forecasts for the year and expectations for the year from the capital market are close to the lower limit of the target, and expectations derived from banks' internal interest rates fell below the target.".
In addition, the Bank of Israel notes the slowdown in real activity in the economy. Regarding the housing market, the Bank of Israel's Monetary Committee notes that in the past 12 months, apartment prices have increased by 7.71%, and the rate of mortgage take-up continues to be high. "The uncertainty regarding the application of zero VAT on new apartments continues to impact activity in the housing market.".
