Last Monday, the Bank of Israel published the protocols of the October interest rate discussion, in which Governor of the Bank of Israel Prof. Stanley Fischer decided to lower the rate by 0.25% to 3.00%, a move that took most analysts by surprise. According to the protocol, most of the Monetary Forum's members recommended leaving the rate unchanged at 3.25%. However, Fischer decided to go forward with the rate lowering.
In its weekly report, Meitav Investment House Ltd. said, "November's interest rate will probably remain unchanged, but with a good chance of another reduction to 2.75%, with the release of new data indicating a slowing down of the economy, and initial drops in real estate prices." Starting next month, the interest rate will be set by a monetary committee, and not by the governor alone.
The trade deficit for September, after seasonal fluctuations are discounted, was $613 million. Meitav estimates that, "The trade deficit will continue over the next few months, although it could become more moderate." Meitav claims that although the global economy is stagnating, and there is concern that a double dip recession could negatively affect exports, the sharp devaluation of the shekel against the dollar over the last few months has been beneficial for exporters. Moreover, Meitav points out that Israeli exports are deepening their exposure to the Far East, a region that has not been hit as hard as Europe or the US."
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