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COUNTRY INSIGHTS

A rate hold decision is expected hinting at likely loosening when geopolitical risks decline
ISRAEL · In Brief · 07 Jul 2024

Geopolitics: There is renewed optimism regarding a possible cease-fire and a hostage deal with Hamas not demanding a complete end to hostilities and total Israel withdrawal as pre-conditions for a deal. It is still difficult to say whether a deal will actually occur. Israel continues to operate i...

Pace of bond issuance remains steady, MoF confident in reaching its fiscal target
ISRAEL · Report · 01 Jul 2024

1. Private consumption growth has decelerated but the level of consumption remains strong. 2. The pace of government bond issuance remains steady, and the MoF is reporting robust tax revenues in June. 3. We expect a rate-hold decision next week on elevated geopolitical risks.

Pace of government debt issuance remains steady, tax revenues remain strong in June
ISRAEL · In Brief · 30 Jun 2024

Geopolitics: Israel continues to operate in Gaza targeting specific areas. The missile barrage from Lebanon has decreased somewhat compared to the previous week. There is a vague renewed initiative for a cease-fire with Hamas, according to the US. Although the Supreme Court ruled that the ultra-o...

Slow housing activity + tight labor market support inflationary pressure
ISRAEL · Report · 24 Jun 2024

1. The labor market remains tight with job vacancies elevated and the unemployment rate low. 2. Residential completions declined sharply in Q124; a trend which will likely support higher housing prices, rentals as well. 3. The current account remained strong in Q124 but FDI declined. Fund...

Weak residential investments and a tight labor market are expected to keep inflation elevated
ISRAEL · In Brief · 23 Jun 2024

Geopolitics: Israel continues to operate in Rafah targeting Hamas operatives and tunnels, but the army says this part of the operation will end in about two weeks’ time. Attention is currently focus on the Northern border with the low-level conflict with Hizballah continuing and Israel threatenin...

CA surplus remains strong, net FDI turns negative
ISRAEL · In Brief · 17 Jun 2024

Macro fundamentals remain shekel-supportive, but slightly less in previous. The current account surplus reached 6.8bn USD in the 1st quarter of 2024, down from 9.3bn in Q423, but higher than one year ago (5.7bn USD, all SA). In Q124, the service account surplus held nearly stable at 10.5bn while ...

A surprising decline in airline fares moderates inflation
ISRAEL · Report · 17 Jun 2024

1. Inflation in May surprised sharply on the downside due to a sharp unexpected decline in airline fares. 2. We expect inflation to reach 3.1% the coming year due to an expansionary fiscal policy, tight labor market and higher rental prices. 3. Despite May’s low CPI, a possible rate reducti...

Inflation surprises sharply on the downside, but is expected to accelerate going forward
ISRAEL · In Brief · 16 Jun 2024

Geopolitics: Israel continues its offensive in Rafah and missiles/drones continue to penetrate Israel from Hezbollah in the North, at generally a more intense level. Gantz announced his resignation from the government last Sunday. There appears to be little progress in reaching a cease-fire with ...

Rate cut still difficult to price in without a cease-fire
ISRAEL · In Brief · 14 Jun 2024

Sharp downward inflation surprise in May It is rare we see such a below-expectations inflation print. Inflation came in at 0.2% m/m (consensus in Israel was 0.5%-0.7%, we were at the high end), holding steady at 2.8% y/y similar to last month. The main “culprit” for this surprise was flights abro...

Business sector optimism improves modestly
ISRAEL · Report · 10 Jun 2024

1. The fiscal deficit continues to drift higher as expenditure growth remains rapid. 2. Business sector sentiment improved modestly, with expectations for inflationary pressure. 3. We expect inflation in May to reach 0.7% m/m, at the high end of consensus.

Business sentiment improves modestly, but inflation concerns increase
ISRAEL · In Brief · 09 Jun 2024

Geopolitics: Israel continues its offensive in Rafah and missiles/drones continue to penetrate Israel from Hezbollah in the North, at generally a more intense level. Gantz (National Unity Party) announced his resignation from the war cabinet on Sunday, criticizing Netanyahu especially for not pla...

Slide Presentation: Israel - Monetary policy issues: Some good news and some bad news
ISRAEL · Report · 06 Jun 2024

Get insight into the factors driving monetary policy rates in Israel with our slide presentation "Monetary policy issues: Some good news and some bad news".

Fiscal deficit target in 2024 appears credible
ISRAEL · In Brief · 04 Jun 2024

Fiscal deficit target in 2024 appears credible As we had expected, the MOF just published a revised revenue forecast for 2024, which is 16.2 bl ILS above the original fiscal assumption. This takes into account revenues for the first five months and a conservative estimate for the rest of the year...

Hi-tech service exports expand while private consumption slows
ISRAEL · Report · 03 Jun 2024

1. Hi-tech service exports continue to expand, but at a moderate pace. 2. Domestic private consumption has decelerated as more Israelis are traveling abroad. 3. The MoF has maintained its monthly issuance pace but has shortened the average duration in light of pressure for higher yields at ...

Exports improve while PC demand slows
ISRAEL · In Brief · 02 Jun 2024

Geopolitics: President Biden is trying to push for a cease-fire and hostage release in Gaza in a three-stage agreement. The dilemma for Netanyahu remains acute as his far-right coalition partners have threatened to resign if the war ceases before Hamas is defeated. Gantz (National Unity party) is...

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