Saturday, July 29, 2006


Israel economy still holding

The Bank of Israel raises the interest rate for August 2006 by 0.25% to 5.5%
The main considerations behind the decision are:
  1. Inflation in the first half of 2006 was close to the upper limit of the target price-stability range, while viewed over the previous twelve months inflation was above the upper limit of the range. The main forces affecting inflation in the first half of the year––in particular the rise in energy prices and in prices of other imports, and the contraction of the output gap––continue to exert inflationary pressures. These forces were partly offset in the second quarter of 2006 by the strengthening of the sheqel.
  2. In the light of the changed security situation, Israel’s economic risk assessment increased. The rise in risk serves to reduce capital inflows and acts against the forces tending to strengthen the sheqel. This rise in risk, including inflation risk, demands a measure of monetary tightening, in order to maintain price stability and to bolster financial stability.

Guy Rolnik from Haaretz adds: Israel's real deterrent force is in its social durability against the military threats: The backup that the military receives from the citizens and the ability of the state to keep going forward economically even when at war.

technorati tags:

Comments: Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?