The Bank of Israel (BoI) left its policy rate on hold at 4.75% today and, while its communications provided little firm policy guidance, policymakers clearly have one eye on the currency and will probably keep rates unchanged while inflation risks remain high. This is likely to remain the case for the next few months and at this stage we don’t expect an interest rate cut until Q2 next year. In the meantime, fiscal policy is likely to do the heavy lifting supporting the economy during the conflict with Hamas.
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