The Bank of Israel (BoI) hiked rates a more aggressive 50 basis points (bps). Economists at ING expect the shekel to strengthen and forecast the USD/ILS pair at 3.30/20.
Bank Of Israel hikes 50 bps
“BoI’s lift takes the base rate to 1.25%. The BoI research department sees the policy rate being taken up to 2.75% in 1H23 – in line with market pricing.”
“Medium-term, we like the shekel and feel that when the major dollar trend does turn – perhaps towards the end of the year when Fed easing is priced more clearly – USD/ILS should return to the 3.20/30 area and perhaps go even lower next year.”
“This year’s tech-wreck is not expected to hit the Israeli economy as hard as it did in 2000 – so thinks the BoI – and Israel’s balance of payments position should improve later in the year.”