Bank of Israel narrow forum backs rate hike

All four members of the Bank of Israel's narrow forum tasked with making recommendations to the governor agreed to a 50-basis point rate hike, minutes from the central bank's interest rate meetings, published on Monday, said.

In the monthly narrow forum monetary policy discussion in the March 27 and 28, 2011 meeting, four members of management make recommendations to the governor regarding the appropriate rate of interest for the economy. The recent minutes show that at the end of discussions on interest rates for April, all four recommended that  Stanley Fischer, the governor of the Bank of Israel, increase the benchmark interest rate by 50 basis points to 3%.

Members of the forum noted that a rise in the inflation environment had become "evident", with inflation in the previous 12 months at 4.2%, above the upper limit of the inflation target range, and the rate of price increases over the last six months in annual terms higher than the past. They said factors contributing to inflation included higher housing, food and energy prices, with market expectations of inflation also rising. Together they said they expected these factors to continue to exert inflationary pressure in the coming year.

Click here to read the minutes.