JERUSALEM, Sept 4 (Reuters) - Bank of Israel Governor Karnit Flug said on Monday there would be no reason to raise short-term interest rates until inflation moved back into the government’s annual 1-3 percent target range.
The benchmark rate has stood at 0.1 percent since early 2015 and most economists do not expect a rate hike until late 2018 or early 2019.
Israel’s annual inflation rate moved to -0.7 percent in July from -0.2 percent in June. The central bank largely attributed the disinflation to temporary factors such as technical changes in the method of measuring the clothing and footwear component as well as an appreciation of the shekel currency.
“Our rates are not disconnected with the rest of the world,” Flug told a business conference. “Once we see that the inflation (rate) settles back within the target range, that will be the time to change the interest rate.”
Reporting by Steven Scheer; Editing by Gareth Jones