Bank of Israel Decided Today to Leave the Interest Rate Unchanged at 4.5%

The Bank of Israel's Monetary Committee decided today (Monday) to leave the interest rate unchanged at 4.5%. The bank's announcement says: "The degree of uncertainty about the scope and duration of the expected fighting and its effects is very great. The war has significant economic consequences, both for real activity and for the financial markets, and the economy's risk premium still remains at a high level.

"In the context of the war, the monetary committee's policy focuses on stabilizing the markets and reducing uncertainty, alongside price stability and support for economic activity. The interest rate path will be determined according to the continued convergence of inflation to the target, the continued stability in the financial markets, economic activity and fiscal policy." The announcement also referred to the real estate market: "Activity in the real estate market continued to be moderate despite the rise recorded last month in apartment prices. The limitations and difficulties in the industry's activity levels because of the war have eased but remain significant."

Lior Label, northern region director at Elder Mortgage Company, commented on the decision and said: "The Bank of Israel decided to leave the interest rate unchanged, so the rate remains at 4.5%. The direct meaning of the decision is the creation of a stable interest rate environment, and beyond the economic meaning there is also a psychological aspect as a result of the continuation of the trend. The very decision to leave the interest rate unchanged creates confidence and hope among the Israeli public for a gradual decline in the interest rate."

In his words, "in recent months a recovery in mortgage volume has been felt, which began in December, when mortgage volume was estimated at NIS 5.6 billion, NIS 1.1 billion higher than the October low." At the same time, a return to the sales offices and an increase in the number of transactions can be felt. "Assuming the Bank of Israel remains in a stable or lower interest rate environment, buying opportunities will arise in the short term, but over time a significant rise in prices is actually expected."