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For the first time, the Bank of Israel on Monday published the protocol of the meetings held between Governor Stanley Fischer and his staff towards the decisions on interest rates, as part of efforts to increase transparency at the central bank.
"At the present time, the Bank of Israel is working to advance the new legislation for the bank, which, among other [things], defines internal and external supervision mechanisms for the bank and places on [the bank] an obligation of transparency, while ensuring the necessary professional autonomy," the bank said.
Releasing the interest rate decision protocols is "an additional step in the realization of this policy, allowing the public, the Knesset and the government to deepen their understanding of the Bank of Israel's interest rate policy," it added.
Revealing the central bank's detailed discussions that lead to interest rate decisions will help the market better predict Fischer's monthly decisions, so there will be less surprises and exaggerated reactions, that can lead to losses, said IBI chief economist Ayelet Nir.
She praised the bank's openness regarding the factors that go into each decision, as well the weights of each factor and information on how unanimous the decision was.
The first minutes revealed indicated that the decision to raise May's rate by 0.25 percentage points to 5% was advised by all department directors present.
Henceforth, the protocols will be published and placed on the Bank of Israel Web site roughly two weeks after each interest rate decision, the central bank said.
Nir also pointed out that one statement in the protocol could indicate that, while interest rate hikes are expected to plateau in the US, they could continue in Israel based on inflation and inflation expectations - a domestic factor.
"The appraisal of participants in the discussion is that among considerations [toward] the May interest rate decision, emphasis should be given to the relatively high price rises over the past 12 months, beyond the upper limit of the inflation target," the protocol reads. "This is particularly so in light of first-quarter [inflation] index [levels], which were relatively high and beyond expectations. Price rises are consistent with the steady process, that is expected to continue, of the gradual narrowing of the output gap."
If until now, talk had been about the connection between trends in the US interest rate and Fischer's decision, that may change, Nir said.
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