Rents are rising faster, despite the fall in housing prices, according to the conclusions reached in the Bank of Israel Monetary Committee before it made its interest rate decision on May 28. The Monetary Committee decided to leave the interest rate unchanged at 0.1%. Five committee members supported leaving the rate unchanged, while one supported raising it to 0.25%, Globes reports.
According to the report by the Bank of Israel's spokesperson today, most of the Monetary Committee members believe that the exchange rate of the shekel against other currencies is still too low. A discussion developed in the Monetary Committee concerning the forces acting to weaken the shekel, including the continuation of interest rate hikes in the US, a process that is reducing hedge transactions among investment institutions, and the forces acting to strengthen the shekel, including growth in exports.
In the discussion about economic activity, figures were presented to the committee showing that the growth rate in the first quarter was an annualized 4.2%. The committee members believe that the inflationary environment is still low, despite the upward trend in recent months. Committee members stated that while rising wages were expediting the return of inflation into the 1-3% target range, a few factors were likely to delay its return, including the fall in oil prices, the growth of online purchases of consumer goods, and higher exports of services, which are strengthening the shekel.