This range may be temporarily breached due to intense supply side pressures such as what we are seeing today due to abnormal oil markets, but we expect inflation to eventually revert to within the target range. However, we realize that achieving price stability is not enough if we are to help fast track capital market development. More direct action is necessary.
Interest rates in the major economies are expected to remain low for several years, and this will affect Israel’s monetary policy. The slowdown has a direct impact on the demand for Israel’s exports. The situation in Europe is likely to have a negative effect on financial stability there, and hence on global financial stability too.