By Barry Davidson
Wednesday 4 November 2009
Jerusalem--Bank of Israel (BOI) Governor Professor Stanley Fischer sent a letter to the Israeli Government explaining the Inflation report.
Accoring to the BOI, the inflation report covers the third quarter of 2009. It is submitted to the government, the Knesset and then to the Israeli public.
The BOI maintains that this is part of the process of assessing the inflation rate against the inflation target set by the government.
The report was prepared at the BOI Senior Monetary Forum, which is headed by the Governor.
The Governor makes decisions on the interest rate, in the framework of the Forum.
The BOI asserts that developments in the third quarter of 2009 pointed out that there has been a rapid turnaround in Israel's economy.
The BOI said that in the last quarter of 2008 and at the beginning of 2009, exports and the GDP declined considerably.
This occured while the global economic crisis continued.
But, the cusomer price index fell. Share prices and corporate bond prices slumped. Israeli inflation was expected to be below the target range in 2009 or even negative. The situation began to change gradually at the end of the first quarter of 2009.
The BOI noted that Israel's economic turnaround started with the recovery of the financial markets in March. Increases in share prices occurred as well as a renewal of private bond issues. Following was an upturn in economic activity in the second quarter. The rate of inflation increased and reached above the upper limit of the target inflation range.
