The Bank of Israel will keep its rates at 0.25% due to low inflation, according to a Reuters poll

JERUSALEM (Reuters) – Israel's central bank is expected to maintain its focus on short-term interest rates this week for a second consecutive session, despite higher than expected inflation and economic growth rates.

The 13 economists polled in a Reuters poll said policymakers would leave the Bank of Israel's benchmark rate at 0.25 percent when the bank announced its decision on Monday at 16:00 GMT.

The rate remained unchanged on Jan. 7 in Amir Yaron's first decision as governor of the Bank of Israel, following a surprise rise of 0.1 percent on November 26, where it stood since February 2015.

"The Bank of Israel could delay the rate hike, given the increasing uncertainty weighing on the global economy and unconvincing trends in inflation in the country," he said. said David Hauner, head of the EMEA Emerging Markets Economics at BAML.

Economists, however, said they would look at the wording of the rate decision statement as the economy continues to grow at a brisk pace, while the global economy is less conducive to growth in Israel.

Yaron announced last month that it was forecasting a slowdown in monetary tightening, with central bank economists predicting that rates would remain unchanged for the first half of 2019, before rising to 0.5% by the end of 2019 .

Private economists agreed, citing 1.2% inflation in January – higher than expected, but close to the bottom of the government's target of 1 to 3% per year and well below the 2% deemed necessary by the central bank so that inflation remains stable.

Inflation "should not be at the center of the target range in the near future," said Gil Bufman, chief economist at Bank Leumi.

"This … will make it difficult for the Monetary Committee to raise the central bank's policy rate to a noticeable degree, as long as the current framework of the price stability objective is maintained," he said. -he declares.

The Israeli economy grew at an annualized rate of 3.1% faster than expected in the fourth quarter, bringing growth for 2018 to 3.3%, down from 3.5% in 2017.

The Bank of Israel is forecasting growth of 3.4 percent this year and 3.5 percent in 2020.

Another factor against a rate hike this month is a stronger shekel, which has appreciated from $ 3.6 to $ 3.7 against the dollar compared to 3.7 at the time of the decision to previous rate.

This meeting will be the last for Deputy Governor Nadine Baudot-Trajtenberg, who will retire at the end of the month at the end of her five-year term. Baudot-Trajtenberg was acting governor when the rates were raised in November.