JERUSALEM Jan 2 Israel's central bank said on
Monday that its medium-term policy goals would include preparing
for an interest rate rise, though it gave no detailed time frame
for when it might begin a tightening cycle with economic growth
seen slowing this year.
Price stability would remain its chief aim, the Bank of
Israel said, adding that an anticipated recovery in the global
economy required the regulator to "prepare for a renormalisation
of monetary policy" in the longer term.
"To that end, the Bank of Israel will continue to align the
macroeconomic projection abilities with conditions created after
the crisis and to take into account considerations related to
financial stability when formulating monetary policy," it said.
The central bank last week held its benchmark interest rate
at 0.1 percent for a 22nd straight month. Its own economists
project steady rates through the third quarter of 2017 and a 15
basis point increase in the fourth quarter.
Israel has been in deflation for more than two years, with
the annual inflation rate at -0.3 percent in November. Inflation
is expected to reach 1 percent late this year, the bottom of the
government's 1-3 percent annual inflation target.
Israel's economy grew a provisional 3.8 percent in 2016 and
is forecast to grow 3.2 percent this year.
Other three-year targets included increasing banking
competition and efficiency, it said.
The bank said it wanted to bolster competition in retail
credit areas, including lending to small businesses and the
provision of payment and settlement systems, by supporting
technology changes and setting up a national credit data
The central bank said per capita GDP may decline sharply
later this decade due to changes in demographics. It said it
would recommend to government policies support growth by
boosting productivity and developing infrastructure and human
It also said it would continue looking to expand the range
of markets and assets in which it invests foreign exchange
(Reporting by Steven Scheer; editing by Richard Lough)