April 18, 2019 / 11:31 AM / 2 months ago

UPDATE 1-Four of five Bank of Israel MPC members voted to hold key rate -minutes

(Adds details, quotes)

By Steven Scheer

JERUSALEM, April 18 (Reuters) - Four of the five rate setters at the Bank of Israel voted to keep the benchmark interest rate at 0.25 percent when they met on April 8, minutes of the discussions showed on Thursday, citing concerns over global economic growth.

One member of the monetary policy committee (MPC) voted for a quarter-point increase to 0.5 percent, the central bank said.

“(Most) committee members believed that even though there has been some increase in the inflation environment, the interest rate should be left at its current level for the time being, in view of the uncertainty regarding the forecasts of global real economic activity and monetary policy, and regarding the future path of inflation in Israel,” the minutes said.

Annual inflation was 1.2 percent in February, near the bottom of the government’s 1-3 percent target. Data earlier this week showed the rate moved to 1.4 percent in March.

The central bank, which raised the key rate by 15 basis points last November to 0.25 percent, has said future hikes would be gradual and cautious and depended on inflation moving near the midpoint of the target - or around 2 percent.

The bank’s economists estimate the next rate increase of a quarter-point towards the end of the third quarter and then two more hikes next year to bring the rate to 1.0 percent at the end of 2020.

Policymakers, in leaving the key rate unchanged for a third straight meeting under governor Amir Yaron, said Israel’s economy was continuing to grow well and that the slowdown in mid-2018 was transitory. It noted that the labour market was tight but may have reached its peak.

Growth was 3.3 percent in 2018 and a similar pace is projected in 2019.

The MPC member who voted for an increase believed the rate is not in line with the state of the economy and a hike is warranted since inflation has been within the target range for some time, the minutes said.

The MPC typically has six members but deputy governor Nadine Baudot-Trajtenberg stepped down at the end of February and has yet to be replaced. (Reporting by Steven Scheer; Editing by Hugh Lawson)

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