Governor of the Bank of Israel Amir Yaron at the Maariv/Maariv conference
The Bank of Israel announced that the interest rate in the economy will remain unchanged and will continue to stand at 4.5%.
The bank disappoints some of the market analysts who expected a decrease, and everyone who holds a loan, mortgage or leveraged business owners.
This is the second time in a row that the Bank of Israel does not change the interest rate, from which the prime rate is derived, which will continue to stand at 6%.
Last February, the Bank of Israel decided that the interest rate in the economy would remain unchanged and continue to stand at 4.5%, this after in January it recorded a decrease of 0.25%, for the first time since the outbreak of the Corona epidemic in April 2020.
Market analysts were divided regarding the expected decision, when the reasons for the interest rate cut include financial profit for economies the house and the business activity in the economy. In addition, it seems that the inflation target is converging towards the upper limit of expectations, which stands at about 3%, and this also supports lowering interest rates.
On the other hand, reasons for not lowering the interest rate include the great uncertainty that still exists in the economy regarding the continuation of the war, in addition, the March index is expected to show an increase in the price of various items which may further increase inflation.
Yaron The market was waiting vigilantly/Abshalom Shoshani
The capital market does not remember a time when the entire economy was in uncertainty about the decision before it was made, and opinions differed about its direction.
Every change in the interest rate represents billions of shekels, and no less than that - the fate of businesses. But while presenting the issue from this direction leads to the thought that this is the right step to take, a decision to lower the interest rate too early could harm the entire Israeli economy, and even contribute to the cost of living.
Eyal Haim, VP of Marketing and Sales at Ayalon Mutual Funds, says that "from the point of view of the entire economy, the interest rate is the most influential economic figure, since most loans in the Israeli economy are at a variable interest rate, which is influenced by the prime, which is influenced by the interest rate set by the Bank of Israel."
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Amir Yaron
Bank of Israel
Bank of Israel interest rate
The interest rate in the economy