The Bank of Israel’s approach is to try to bring the rate back gradually within the range, and if possible to the midpoint of the range, with a one year forward horizon. The underlying reason for this approach is to avoid causing inflation volatility by sharp changes in the interest rate.
But first, I’d like to say how much I appreciate the chance to return to the University of British Columbia campus. Five years ago, I was here as a Senior Fellow in the Commerce Faculty.