Report: BoI MPC members voted 4-1 to raise rate

Policymakers at Israel’s central bank voted 4-1 to raise the benchmark interest rate to 0.25% on November 26 in the first rate increase for more than seven years, minutes of the discussions showed on Monday.

One member of the Monetary Policy Committee voted to keep the interest rate at 0.1% while the others opted to start moving it up from the ultra-low level.

“The committee members assessed that the continuation of the normalization process will be carried out gradually and cautiously,” the minutes said.

The surprise move was the MPC’s first rate rise since mid-2011. It was also the first rate move since a cut in early 2015.

It came in a transition period, under the leadership of Nadine Baudot-Trajtenberg, the bank’s deputy head who has been acting chief since Karnit Flug’s five-year term as governor ended in mid-November.

Israel’s cabinet approved Amir Yaron, a professor at the University of Pennsylvania, as the new governor. He is expected to be sworn in before the central bank’s next policy meeting on January 7.

The four members who supported the rate rise believed “the conditions had ripened for the beginning of the process of withdrawing from the very accommodative policy that had been adopted in recent years,” according to the minutes.

The one member who opposed the hike believed it was a “borderline situation” where either decision could be justified, but felt the move should be made by the new governor, the minutes showed.

Israel’s inflation rate held steady at 1.2% in October, at the low end of the government’s 1%-3% annual target range. (Reuters)