3 Minutes to Read Reuters – JERUSALEM (Reuters) – The Bank of Israel is anticipated to keep short-term interest rates steady this week for the tenth time in a row, as the debate over inflation gains continues. PHOTO FROM THE FILE: In this illustration from June 22, 2017, an Israeli shekel note can be seen. Thomas White/Thomas White/Thomas White/Thomas White/Thomas White/Thomas White/Thomas White/ When the decision is revealed on Monday at 4 p.m., all 16 analysts polled by Reuters predict the monetary policy committee (MPC) will retain the benchmark rate at an all-time low of 0.1 percent (1300 GMT). Analysts are looking to the central bank for decisions on extending government bond purchases and continuing to buy foreign currency to add to its record level of reserves in order to contain the strong shekel, with the rate expected to remain on hold for at least another year and some projecting 2023. In addition to the interest rate announcement, the Bank of Israel will update its macro predictions for 2021 and 2022, and governor Amir Yaron will have his quarterly press conference at 1315 GMT. In response to rising bond yields during the start of the COVID-19 epidemic, the central bank announced a quantitative easing (QE) program in March 2020, announcing it would buy up to 50 billion shekels ($15 billion) in government bonds. The amount was increased to 85 billion in October. The bank had purchased 65.3 billion shekels worth of government bonds as of May. It may have approached 70 billion shekels in June (figures will be released on July 7) and could reach 80 billion in September at a rate of 3-4 billion shekels per month. Jonathan Katz, chief economist at Leader Capital Markets, believes Yaron would most likely announce that the program will not be renewed, a possibility he feels is already priced into the market. Others believe Yaron will broaden the program. According to Alex Zabezhinsky, head economist at the Meitav Dash brokerage, it could be increased by another 15-30 billion shekels owing to time. He believes the central bank will disclose any decision at one of its upcoming press conferences, which will take place on Monday or in October, when the total bonds purchased will be close to the threshold and there will be little time to act. “If Netanyahu wants to be able to explain his choice in a news conference, the Bank of Israel might announce the program’s continuation or cancellation this week.” Similarly, the Bank of Israel purchased $22 billion in foreign currency in the first five months of 2021, as part of a $30 billion purchase goal for the year. If necessary, Yaron has stated that acquisitions may reach $30 billion. Israel’s inflation rate increased to 1.5 percent in May from 0.8 percent in April, around the center of the government’s 1-3 percent annual goal range, although policymakers have stressed it’s difficult to tell if the increase is temporary. After widespread COVID vaccinations among adults, the central bank forecasted 6.3 percent economic growth this year in April. As the Delta variety takes hold, infection rates have begun to rise. $3.2674 shekels = $1 Steven Scheer contributed reporting, while Ari Rabinovitch and Barbara Lewis edited the piece./n
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