The Bank of Israel keeps the interest rate forDecember 2012 unchanged at 2%

Most economic indicators support the assessment that moderate growth in activity has continued
 
The decision to leave the interest rate for December 2012 unchanged at 2%, after reducing it the previous month, is consistent with the Bank of Israel's interest rate policy which is intended to entrench the inflation rate within the price stability target of 1–3% a year over the next twelve months, and to support growth while maintaining financial stability.
 
The main considerations underlying the decision: The rate of inflation over the previous twelve months is at the midpoint of the inflation target range, and inflationary pressures are not visible. Various measures of inflation expectations for the coming twelve months are also around the midpoint of the target range.
 
Most economic indicators which became available this month support the assessment that moderate growth in activity has continued, and is expected to continue in the coming months. These indicators are consistent with the Research Department forecast of 3.3% GDP growth in 2012 and 3% growth in 2013. Various surveys of economic activity continue to indicate pessimism and projections for moderation in activity.
 
The level of economic risk from around the world remains high, and with it the concerns over negative effects on the local economy. Economic indicators point to moderate improvement in the US and Chinese economies, in contrast to continued recession in Europe and a deterioration in the economic situation in Japan. Inflation worldwide continues to be low, and commodity prices, which remained stable this month, are expected to continue to support the current level of inflation.
 
During the month, most economies did not see a change in monetary policy, and interest rates in major economies remained low. In addition, markets are not pricing in an interest rate increase this year by any of the central banks of the large advanced economies. The quantitative easing policies of the Federal Reserve, the Bank of England, and the Bank of Japan continue.