Market expects Fischer to raise rates
Bank of Israel Governor Stanley Fischer is due to announce interest rates for October today, and 75% of economists surveyed think he's going to raise them by 0.25%, to 2%, a Bloomberg survey found.
The official announcement comes at 5:30 P.M. today.
Economists from Barclays Bank, who did not participate in the survey, also said they expected Fischer to raise rates, in light of Israel's positive growth figures. GDP growth was 4.6% in annualized terms for the second quarter.
Finance Minister Yuval Steinitz has opposed a rate increase at this time because it would hurt exports. Raising interest rates would increase demand for the shekel, pushing up the exchange rate and making Israeli exports more expensive in other countries.
One of the reasons motivating the bank to raise rates is the real estate market - prices have been registering double-digit gains over the past few years, and the bank fears a bubble. Steinitz argued that the real estate market has been stabilizing.
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