Capital markets see 2.2% inflation next year

Israeli capital markets expect inflation over the next year to be 2.2%, the Bank of Israel reported yesterday. But the consensus opinion of analysts and banks is for a 1.8% rise in prices. The central bank's monthly analysis of inflation expectations is based on the yields of government bonds indexed for inflation compared to those not indexed. With the government's target range for inflation this year and next is 1% to 3%, both forecasts are comfortably near the middle of this range. The central bank also reported the M1 money supply grew a sharp 2.9% in November to NIS 122.2 billion. The M1 figure, a major indicator used by the Bank of Israel in its interest rate decisions, has grown 7.1% over the past 12 months. (Moti Bassok )

Tax exemption for home sellers is being extended till May

Good news for many selling their homes: The tax exemption on the net capital gains from a sale will be extended until next May - until after the election and formation of a new government. The Knesset Finance Committee was scheduled to discuss the change last night and vote on it. This specific exemption applies to those who have sold three homes within a certain time frame, with two of the homes being worth no more than NIS 2.2 million each. Capital gains on the first two are already exempt in most cases. The exemption was scheduled to end on December 31. Committee chairman MK Moshe Gafni (United Torah Judaism ) was behind the initiative. (Zvi Zrahiya )

Drivers to get discount on insurance when cars are out of use for 30 days or more

Drivers will be able to save money on car insurance if their vehicles are out of use for at least 30 days. Under existing regulations, the only thing car owners can do in such a case is cancel their insurance policies and take out new ones when the car is back on the road, a costly affair. The Finance Ministry has finished formulating a draft of new regulations on the matter, which are likely to take effect early next year. Other new regulations will also make it easier for those who own or hold a number of vehicles at the same time, such as used car dealers, importers or garages, to insure them at a reasonable price. (Daniel Schmil )

Knesset clears NIS 2b more in backing for Israel Electric Corporation

The Knesset Finance Committee approved state guarantees of NIS 2 billion for the Israel Electric Corporation, which will allow the company to raise the funds it needs to cover its immediate cash flow shortfall. The guarantees were originally scheduled to be granted only next year, but Finance Minister Yuval Steinitz asked the committee to move up the approval. Yiftah Ron-Tal, CEO of the Electric Corp., told the committee that if the natural gas from the Tamar offshore field is delayed past its May arrival date, the company will be in even worse shape than it's in now. A few months ago, the IEC made a mistake in its cash flow projections for this year and next, and found itself short NIS 1.4 billion this year. (Zvi Zrahiya and Itai Trilnick )