Israel Discount Bank: Interest rate to fall to 1.5 percent
Bank expects the Bank of Israel to lower interest rates in the coming months in a move that it says would be supported by central banks' expansionary policies around the world.
Israel Discount Bank expects the Bank of Israel to lower interest rates to 1.5% from the current 2.25% in the coming months.
Discount noted last week that such a move would be supported by central banks' expansionary policies around the world, the global economic crisis, the Israeli economic slowdown and the government's efforts to fight the deficit through spending cuts and tax increases.
A week ago, Bank of Israel Governor Stanley Fischer said he expected the government's steps to promote growth.
The bank's chief economist, Nira Shamir, sees this as a sign that Fischer wants lower interest rates. "The governor notes that once the government begins to deal with the deficit, he can sweeten the pill by reducing interest rates more sharply," Shamir said.
Lower interest rates usually prompt worries about inflation, but Shamir says she isn't worried because annual inflation is running at just 1%.