Inflation forecast dropped to 2.5%
Bank of Israel governor may reduce interest rate from 3.25% to 3% in order to curb slowdown, prevent the start of possible recession
A forecast published in February placed the inflation rate at 3.8%. It was later reduced to 2.9% in July.
It turns out that the economic slowdown, the renewed recession in the world, the social protest, the unrest in the countries bordering Israel and the escalation in the south – have all led to a sharp drop in demands and to price reductions.
Following the drop in the inflation rate, Bank of Israel Governor Stanley Fischer may reduce the Israeli economy's interest rate from 3.25% to 3% on Monday, in order to curb the slowdown and prevent the start of a possible recession.
A drop in the interest rate may help the stock exchange recover slightly, following the significant falls in recent weeks, as it will reduce the attractiveness of investing in interest-bearing alternative assets.
Fuel prices are expected to fall significantly at the end of August due to the drop in global oil prices worldwide throughout the month. Meanwhile, stores are still offering special sales, especially in the food category, due to the ongoing social protest.
The result may be very low – and even negative – indices for August and September, on the eve of the High Holidays.
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