Israel’s failure to cap a surge in housing prices threatens to add a new drag on an already slowing economy.
The Bank of Israel may emulate Switzerland and the Czech Republic in setting a floor for the shekel, as the currency trades near its strongest in 31 months, according to HSBC Holdings Plc.
The Bank of Israel’s surprise interest-rate cut last month was another shot in a losing battle against one of the world’s strongest currencies.
Concerns that unemployment may climb outweighed worries about housing prices when the Bank of Israel decided to cut its benchmark rate, a member of the monetary policy committee said.
A rebound in Israeli exports is signaling to Goldman Sachs Group Inc. that central bank Governor Karnit Flug will resist manufacturers’ calls to cut interest rates to weaken the shekel.
Israel’s economy will probably expand 4.1 percent this year, powered by exports, consumer spending and home construction, the Central Bureau of Statistics said.
Bank of Israel Governor Stanley Fischer raised the benchmark interest rate for the first time in four months in a bid to cool housing prices which he says could develop into a bubble.
Israel’s efforts to curb the shekel’s world-beating advance and make the Middle Eastern nation more competitive are finally winning the support of currency traders.
Bank of Israel Governor Stanley Fischer, who last week unexpectedly cut the benchmark interest rate to a three-year low, may not be done yet, according to Jonathan Katz, an economist at HSBC Holdings Plc.
Israel’s technology industry is growing up and the stock market is benefiting.
"There's an enormous amount of red tape to cut before you can even dream of creating enough supply."
- Jonathan Katz on Mar 25, 2014