traders watching stocks.
(photo credit: Rafael Marchante/Reuters)
Top Bank of Israel officials are holding regular meetings to discuss the market
conditions and possible responses to them, and may decide to cut the interest
rate for September in response to plunges on the Tel Aviv Stock Exchange and
“We’re constantly monitoring global developments,” a top
Bank of Israel source said. “We’re examining how close they will come to us. We
met Sunday and yesterday. The monetary council is meeting tomorrow. We have to
see how things will develop.
The graphs don’t yet tell us whether this is
a one-off drop, a kind of correction, or if the falls will
Fortunately for us, the governor has a lot of
The minutes of the interest rate decision for August,
published Monday, revealed that the central bank discussed a possible downgrade
of the US credit rating. It was also worried about the deteriorating economic
conditions in the US and Europe.
With the rest of the world, the central
is now waiting to see what measures the US Federal Reserve will carry out,
including a possible third qualitative easement to stabilize the economy and
The Bank of Israel will announce the interest rate for September
at the end of August. Conditions for an interest rate cut are now higher than
before, with lower inflation expectations, slowing economic growth, and worries
about a new global economic crisis.
“We’re worried about the debt crisis,
and we said so in the protocols,” said the central bank source. As for the
possibility that the bank will take drastic action of the kind it took in
response to the October 2008 crisis, when it made an extraordinary midmonth
interest rate cut, the source said, “If we have to act, we’ll act – and we know
how to act very fast. But that’s not on the agenda at the moment.”