Economic "Globes": Expectations of a Rate Cut by the Bank of Israel Tomorrow, Monday

Sada News Economy Translation - The Hebrew economic newspaper "Globes" reported expectations that the "Bank of Israel" will announce its decision regarding the interest rate tomorrow, indicating that the majority of economists expect the interest rate to remain at 4.5%. However, financial market experts estimate there is a 65% chance of seeing a rate cut tomorrow.

The newspaper explained that "before the escalation with Iran began, the market expected the central bank to cut interest rates in September, but now the market estimates there is a 10% chance of a rate cut in the next decision and a 65% chance of a cut in August, with expectations that the interest rate will reach 3.60% in about a year," according to Sada News's translation.

Experts' Expectations 

As translated by Sada News from the newspaper, financial market experts estimate that there is a possibility that the Bank of Israel will cut interest rates in its anticipated decision tomorrow, Monday at 16:00, attributed to a decrease in Israel's risk premium, in addition to a significant increase in the value of the shekel, which has risen by 6.1% against a basket of currencies since the last interest rate decision.

They also point out that the consumer price index in May showed a general slowdown in inflation, including in rental prices, products, and services. Additionally, core inflation, excluding government interventions (like VAT), slowed to 2.5% from 2.9%, which is closer to the Bank of Israel's price stability target.

"Global conditions may support a rate cut"
Experts noted that many central banks worldwide (excluding the US Federal Reserve) have cut interest rates or signaled a reduction since Israel's last interest rate decision, according to Sada News's translation.

Expectations at "Metap" and "The Phoenix"

The newspaper revealed that investment institutions such as "Metap" and "The Phoenix" estimate that a rate cut in Israel will not occur before September. Matan Shtrait, Chief Economist at "The Phoenix", stated that "it is unlikely we will see a rate cut tomorrow, and we also do not expect a cut in August, unless surprises occur, with the main reason being that annual inflation is still above the target's upper limit and is expected to remain so until the August interest rate decision."
This view is echoed by Modi Shafrit, Chief Strategist at Bank "Hapoalim", who noted that the interest rate may remain unchanged tomorrow, but given the strength of the shekel and declining inflation expectations, the Bank of Israel is expected to indicate the possibility of a rate cut in the coming months (August or September).