April 22, 2024

War and Fed Shape Israel Rate Decision That Looks Like a Toss-Up

Israel will diverge even further from the policy path set out by the Federal Reserve if most economists prove right and the central bank cuts interest rates again to help the war-hit economy.

The Bank of Israel already broke with its US counterparts in cutting rates to start the year, after a long stretch when it largely followed the Fed’s lead in bringing borrowing costs to their highest since 2006. But priorities changed in the aftermath of Hamas’s attacks in October, a shock that led to a near-record economic contraction last quarter with inflation remaining subdued.

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