The Bank of Israel left its benchmark interest rate at 0.1% for a third straight month, citing a stable shekel, mixed economic data and an improved inflation outlook.
The decision to keep the interest rate for June 2015 unchanged at 0.1% is consistent with the Bank of Israel's monetary policy, which is intended to return the inflation rate to within the price stability target of 1–3% a year over the next twelve months, and to support growth while maintaining financial stability.
The path of the interest rate in the future depends on developments in the inflation environment, growth in Israel and in the global economy, the monetary policies of major central banks, and developments in the exchange rate of the shekel. Israel's economy grew a weaker-than-expected 2.5% in the first quarter, although analysts pointed to a jump in private spending as a good sign for the economy, which is forecast to grow 3.2% this year.
The Bank of Israel noted that the business sector grew in the first quarter, while the unemployment rate continued to decline, and tax revenue data indicate continued growth in private consumption.
But data point to a contraction in goods exports and to an absence of growth in services exports over recent months, the central bank said. 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.