Bank of Israel keeps interest rate on hold

The decision is consistent with the gradual process of returning the interest rate to a more normal level intended to position inflation firmly within the target range
 
Israel's central bank on Monday kept its benchmark interest rate for January 2011 unchanged at 2% against the backdrop of contained inflation and a slowdown in asset price rises.
 
The Bank of Israel noted that the decision to keep the interest rate for January unchanged at 2% is consistent with the gradual process of returning the interest rate to a more normal level intended to position inflation firmly within the target range, and to support the further recovery of economic activity, while maintaining financial stability.
 
The rate of increase in the interest rate is not pre-determined, but is set in accordance with the inflation environment, growth in Israel and globally, the monetary policies of the leading central banks, and developments in the exchange rates of the shekel. At the current level of the interest rate, monetary policy continues to be expansionary.
 
The Bank of Israel will continue to monitor Israeli and worldwide economic and financial developments, and will use the instruments available to it to achieve its objectives of price stability, the encouragement of employment and growth, and support for the stability of the financial system, including keeping a close watch on developments in the assets market, and especially in the housing market.
 
The bank stated inflation is expected to be within the 1-3% target over the coming year, at 2.6%, partly due to the appreciation of the shekel in the past month.