Posted on 08/30/2009 2:44:49 AM PDT by kress
Bank of Israel Governor Stanley Fischer yesterday announced an interest rate hike for September 2009, thus becoming the first central banker throughout the developed world to raise interest rates since the economic crisis began last year.
The increase isn't big: Fischer is raising the Bank of Israel's overnight lending rate to banks by 0.25%, to 0.75%.
A rate of 0.5%, which had been in place for five months, is all right for an economy in deep recession, a top official at the Bank of Israel told TheMarker yesterday. But Israel isn't in deep recession: Enough indicators show improvement to warrant the increase, he said. "Interest of 0.75% is still low, even negative in real (inflation-adjusted) terms," he said. He also stressed that the rate hike doesn't necessarily portend more around the corner.
In its announcement, the central bank explained that inflation has been raising its head: The consumer price index increased by 1.1% in July, confounding forecasters. Since the year began, the CPI has increased by 3.2%. Over the last 12 months, it's risen by 3.5%.
Evidently it was time for the central bank to take inflation into consideration at the expense of economic growth. Lower interest rates can support growth, but also encourage inflation. The Bank of Israel's central mission is to keep inflation within the range of 1% to 3%, which is defined as price stability. Inflation of 3.5% over the last 12 months is above the target range.
(Excerpt) Read more at haaretz.com ...
Hmmm. Israel raises their interest rates and Sweden reduces theirs below zero (ie. negative rates). What is going on...I thought that the recession was over (or they keep telling us this is so)... Somebody is way wrong here...
ping
Here we go!
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It don't look good ................ FRegards
...Fischer is raising the Bank of Israel's overnight lending rate to banks by 0.25%, to 0.75%.
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