Israel’s tight labour market to push up wages soon

Israel’s labour market has tightened significantly in recent months and while there is so far little sign of a burst of wage pressure coming through, this is likely to be in the pipeline and feed through into stronger core inflation next year. Alongside a more hawkish shift by the US Fed, we think the Bank of Israel will raise interest rates by 50bp in July and August and push rates from 0.75% now to 3.00% by early 2023.