The Jerusalem Post

Moody’s: Passing Israeli budget would be ‘credit positive’

Five of six interest rate setters on BoI’s monetary policy committee voted to stay at 0.1%, minutes show

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The Knesset’s approval of a new government marks the end of protracted political deadlock and will allow for the passage of a budget, a positive for the country’s credit rating, ratings agency Moody’s said Monday.

“Although this is likely to result in a fragile and potentiall­y short-lived government, we expect the lack of ideologica­l cohesion to increase incentives to focus primarily on economic policies rather than more divisive issues,” Moody’s analysts said in a research note.

“The passage of a new budget will be key to gaining greater visibility on the medium-term fiscal policy outlook after the weakening we have observed in Israel’s fiscal policy effectiven­ess in recent years, in part because of the polarized political environmen­t,” they wrote.

Moody’s rates Israel at A1 with a stable outlook.

Meanwhile, Five of six Bank of Israel rate setters voted to keep the benchmark interest rate at 0.1% on May 31, minutes of the discussion­s showed on Monday.

One committee member supported a reduction to 0.0%, citing concerns over unemployme­nt.

The five members who voted to keep the interest rate unchanged thought that the low level “supports a recovery of economic activity and a gradual return of inflation to the target range, particular­ly in view of the Bank of Israel using additional tools in the credit market and in the foreign-exchange market.” (Reuters)

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