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Bank Of Israel Holds Rate Unchanged For Tenth Time

Israel's central bank left the key interest unchanged for a tenth consecutive policy session, citing low inflation and weaker growth outlook.

The Monetary Committee of the Bank of Israel decided to the rate unchanged at 0.25 percent. The previous change in the rate was a 15 basis point hike in November 2018.

"The Monetary Committee's assessment is that in view of the inflation environment in Israel, the monetary policies of major central banks, developments in the global economy and the risks to the domestic economy, and the development of the exchange rate, it will be necessary to leave the interest rate at its current level for a prolonged period or to reduce it," the central bank said in a statement.

The Committee is taking additional steps to make monetary policy more accommodative, the bank added.

Regarding the coronavirus outbreak in China, the central bank said the event is casting uncertainty on the global as well as domestic economic outlook. Citing the prevailing assessment of global financial institutions that the outbreak is likely to be contained in the coming months and its economic impact is expected to be limited.

Hence, the Bank of Israel expects no significant macroeconomic impact in Israel. "If the crisis persists and spills over into additional countries, and particularly if strict preventative measures are required in Israel, it is expected to have a more significant impact," the bank said.

"In such a scenario, the Monetary Committee has a range of tools to make monetary policy more accommodative."

The central bank expects the interim budget to have a "markedly contractionary effect" in the first half of 2020, and continuing uncertainty regarding budgetary policy after the elections.

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