Israel’s central bank kept interest rates unchanged on Monday, breaking with the US Federal Reserve’s last decision to tighten policy even after the shekel depreciated almost to a three-year low.
The monetary committee left its benchmark at 4.75% for a second consecutive meeting, in line with the forecasts of almost all economists surveyed by Bloomberg. The shekel maintained losses after the announcement and traded 0.2% weaker against the dollar at 4:12 p.m. in Tel Aviv.
Israel’s central bank raised rates 10 straight times after starting in February 2022 near zero. The tightening is finally paying off, with inflation slowing by nearly a full percentage point in July to an annual 3.3%. Excluding a short-lived depreciation at the start of the Covid-19 pandemic, the shekel is now near a six-year low. It’s down 6% against the dollar since mid-July, one of the worst performances in a basket of expanded major currencies tracked by Bloomberg. Those recent losses have taken its drop in 2023 to almost 8% and increased its volatility to the highest in more than a decade.
Yaron, who’s approaching the end of his five-year stint, has criticized the judicial overhaul and has said he’ll announce his plans for the future around September. On Monday, the central bank denied a report in local media that the governor was preparing to make an announcement after the rate decision about whether or not he’d seek a new term.
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