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Israel kept its 0.10% base rate on hold this week, as expected. The central bank is under pressure to loosen monetary policy conditions with inflation low at -0.3% y/y and recent growth indictors very negative.
The main cause of the decline in growth has been weak export performance. Conditions could be improved by depreciation of the ILS. The BoI will keep its interest rate on hold and concentrate on policies to weaken the ILS, mainly FX intervention by the BoI with assistance from the Ministry of Finance, while waiting for the Fed rate hikes to begin, says Barclays.
