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Main economic background data to the Monetary Committee’s Interest Rate decision October 7, 2019

A summary of the main economic data influencing the Monetary Committee's interest rate decision on October 7, 2019. Topics include inflation, monetary environment, real economic activity, labor market, wages, and the global economy.

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Main economic background data to the Monetary Committee’s Interest Rate decision October 7, 2019

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  1. Main economic background data to the Monetary Committee’s Interest Rate decision October 7, 2019

  2. The Monetary-Financial Environment

  3. Inflation is below the target range for the third consecutive month. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Based on Central Bureau of Statistics.

  4. Inflation excluding energy, fruits and vegetables has been stable in the range of 0.9–1.1 percent for a number of months. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Based on Central Bureau of Statistics.

  5. Inflation of tradables is negative, impacted by energy prices and the appreciation. Inflation of nontradables was impacted by the decline in fruit and vegetable prices. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Based on Central Bureau of Statistics.

  6. One-year inflation expectations are stable around the lower bound of the target range. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Bank of Israel.

  7. Medium-range expectations increased. Long-term expectations are anchored close to the midpoint of the target range. מקור: למ"ס ועיבודי בנק ישראל 1.6 SOURCE: Bank of Israel.

  8. The appreciation is making it more difficult to return inflation to the target range. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Bank of Israel

  9. The gap in long-term yields between Israel and the US remained stable. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Bloomberg & Bank of Israel

  10. Corporate bond spreads continued their downward trend that began at the beginning of the year. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Based on Central Bureau of Statistics.

  11. The increase in home prices resume in recent months. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Central Bureau of Statistics.

  12. The upward trend in mortgage volume and the downward trend in mortgage interest rates continued. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Bank of Israel

  13. Real Economic Activity

  14. The economy is growing at around its potential growth rate. Quarterly data were affected by volatility in vehicle imports. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Central Bureau of Statistics.

  15. The Composite Index reflects growth in accordance with the long-term growth rate. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Bank of Israel.

  16. The Business Tendency Survey indicates continued growth at the long-term pace, and the Companies Survey points to expansion in activity. SOURCE: Bank of Israel calculations.

  17. Exports are growing, led by services. There was also an increase in goods exports in recent months. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Based on Central Bureau of Statistics.

  18. The Business Tendency Survey indicates some worsening in the erosion of exporters’ profitability. SOURCE: Based on Central Bureau of Statistics.

  19. The labor market remains tight. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Central Bureau of Statistics.

  20. The number of job vacancies is stable at a high level, but their share of positions is in a moderate downward trend. SOURCE: Bank of Israel calculations.

  21. A breakdown of the unemployed and those involuntarily employed part-time shows that the labor market is tight. Figure 18: Breakdown of the Unemployed and those Involuntarily Employed Part-Time SOURCE: Central Bureau of Statistics.

  22. Wages increases continue, led by the business sector, although at a lower pace. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Central Bureau of Statistics.

  23. The Global Economy

  24. The global growth forecast was reduced significantly. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Bloomberg.

  25. The deterioration in world trade continues. מקור: למ"ס ועיבודי בנק ישראל Developed economies SOURCE: CPB

  26. Purchasing managers indices declined but remain within the range indicating expansion. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Bloomberg.

  27. Core inflation in the US increased, while inflation in Europe and Japan remains low. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Bloomberg.

  28. The price of oil was volatile due to the incident in Saudi Arabia. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Bloomberg.

  29. The interest rate in the US was lowered again. In Europe, the interest rate was lowered and additional accommodative measures were taken. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Bloomberg & Central Bureau of Statistics.

  30. Equity indices increased. מקור: למ"ס ועיבודי בנק ישראל SOURCE: Bloomberg.

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