Central Bank Holds Base Lending Rate Unchanged for April

Bank also downgrades its outlook for economic growth this year and next.

Tomer Appelbaum

The Bank of Israel held its base lending rate unchanged for April at 0.75% on Monday, as it downgraded its outlook for economic growth this year and next.

The central bank said gross domestic product, including the contribution of the Tamar natural gas field, would grow only 3.1% this year, down from its previous projection of 3.3% three months ago. Growth will cool to 3% in 2015, it said.

Without Tamar, GDP will expand 2.8% this year, down from a previous estimate of 2.9%. In 2015, Tamar won’t make an appreciable contribution to growth, the bank said.

Despite the slower pace of growth, the unemployment rate will fall to an average of 6.1% in 2014, down from 6.3% last year. It will edge up to 6.2% in 2015.

In related news, on Monday, the Central Bureau of Statistics said the jobless rate dropped to 5.8% in February, down 0.1 percentage point from the month before. The rate fell even as the labor force participation rate held steady for the month at 64.2% of the working age population, the bureau said.

The unemployment rate for the 25-64 age group dropped sharply to 4.9% in February, from 5.4% the month before, it said, as the labor force participation rate rose by 0.3 percentage points, to 79.9%.