The estimate is in response to the 2009 inflation figure released Friday.
Barclays Capital estimates that the Bank of Israel will raise its key lending rate to 3.25% by the end of 2010. The estimate comes is in response to the CPI figure for December, released on Friday, which showed that inflation overshot the government's target range in 2009.
Inflation in December itself was zero, contrary to market expectations of a 0.3% rise in the CPI, bringing inflation in 2009 to 3.9%.
The flat inflation figure for December was in part due to a fall in housing prices, but Barclays notes that "inflation ex-housing has accelerated to 3.4% from less than 1% three months ago," and concludes, "With the rate currently 1.25%, Israel has negative real rates and we expect the Bank of Israel to raise rates to 3.25% by end-2010."
Published by Globes [online], Israel business news - www.globes-online.com - on January 17, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010