The Bank of Israel Monetary Committee held its benchmark interest rate for July 2015 steady at 0.10 percent, saying inflation and short-term inflation expectations were starting to converge toward the bank's target range, helped by a stop to the decline in energy prices and the depreciation of the shekel in second half of 2014.

The Bank of Israel, which cut its rate by 15 basis points in February to counter the negative impact on exports and inflation from a rise in the shekel, said inflation during the March to May period had risen by a rate that was consistent with its inflation target after declining by a total of 1.6% in January and February due to lower water and electricity prices.
 

The bank's economic staff now forecast an inflation rate of 1.6 percent over the coming year.
 

The annual rate of inflation in Israel rose to minus 0.4% in May from minus 0.5% in April, the ninth month in a row of deflation but less than the minus 1.0% annual rate seen in February and March.

The statement adds, "The Bank of Israel will continue to monitor developments in the Israeli and global economies and in financial markets. The Bank will use the tools available to it and will examine the need to use various tools to achieve its objectives of price stability, the encouragement of employment and growth, and support for the stability of the financial system, and in this regard will continue to keep a close watch on developments in the asset markets, including the housing market."