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Post by bot on Jan 24, 2012 5:55:13 GMT -5
Bank of Israel cuts key rate 0.25 point to 2.5% from MarketWatch.com - MarketPulse NEW YORK (MarketWatch) - The Bank of Israel on Monday cut its benchmark interest rate 0.25 percentage point to 2.5% for February. The "slowdown in activity and in demand that started during the second half of 2011 continues," the bank said in its supporting statement. Slower Israeli economic growth is reflected in both its exports and domestic demand, it said. In addition, inflation over the previous year "continues to settle firmly within the target range" of 1% to 3%, the bank said. Inflation expectations for the next 12 months are close to the midpoint of the target range, it said. In a report dated Monday, Goldman Sachs analysts Ahmet Akarli and Michael Hinds said their peer analysts had been split on what the Bank of Israel would do, with a slight majority favoring no change in rates. The Goldman analysts themselves had been looking for a quarter-point cut. They now expect the central bank to leave rates alone until the fourth quarter, when rates should start rising again. They peg Israel's benchmark rate at 3% at the end of this year and 4.5% at the end of 2013. The "risk to our current forecasts may be on the upside (i.e., earlier tightening) if the global backdrop continues to improve and growth becomes better entrenched," they wrote.
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