Israel's Inflation forecast dropped to 2.5%

Port2port News Service
Aug 28, 2011

Due to the drop in the inflation rate, Bank of Israel governor Stanley Fischer may reduce the interest rate to 3% next week.

The Bank of Israel (BoI) updated its annual inflation forecast for the next 12 months to 2.5%.

A forecast published in February placed the inflation rate at 3.8%. It was later reduced to 2.9% in July.

The move followed a period where the inflation rate exceeded the government target of 1.3 percent and after the consumer
price index in July dropped 0.3%. The inflation rate in July was initially placed at 3.8% but was reduced to 2.9%.

Due to the drop in the inflation rate, Bank of Israel governor Stanley Fischer may reduce the interest rate from 3.25% to 3% next week, in an effort to curb the slowdown and prevent the start of a possible recession. A reduced interest rate may also assist the stock exchange following significant falls in recent weeks.

Fuel prices are expected to fall significantly at the end of August due to the drop in global oil prices worldwide throughout the month.