Central Bank Holds Base Lending Rate Unchanged for April

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

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Karnit Flug, Bank of Israel governor.Credit: 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%.