The Bank of Israel will hold a meeting of its monetary policy committee on October 23, 2023, to decide on interest rates on its local currency, the shekel.
Due to developments in the war on the Gaza Strip, analysts on the Tel Aviv Stock Exchange expect that the Bank of Israel will reduce interest rates, a decision the bank last took in April 2020 to confront the consequences of the Covid pandemic.
Currently, interest rates on the shekel are at 4.75%, the highest level since 2007, while Tel Aviv Stock Exchange analysts estimate they will be reduced by 50 basis points.
While Globes, the Israeli economic newspaper, went further and expected the interest rate cut to reach 75 basis points next week, settling at 4%.
Currently, the exchange rate of the dollar in Israel is 4.02 shekels, which is the lowest level of the Israeli currency against its American counterpart since March 2015.
The Israeli economy needs a stimulus that may be the largest since the war with Hezbollah in 2006, with all sectors currently affected by the war, led by services, tourism, insurance, and construction.
Despite the Bank of Israel’s interventions in the exchange market and its announcement of pumping up to 45 billion dollars, the shekel has deteriorated to its current levels, amid expectations of more if Israel announces a ground invasion of the Gaza Strip.