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Investing.com -- Israel’s central bank will not rush to cut interest rates despite the Gaza ceasefire and recent inflation decline, Deputy Governor Andrew Abir said Thursday.
Abir explained that while some indicators support a rate reduction, the central bank plans to maintain a cautious approach given the economy’s positive performance.
The deputy governor noted that labor supply, which was a key constraint during the war, is expected to increase. However, this could be counterbalanced by a boost in consumer demand resulting from the ceasefire.
"You could expect sort of a demand-side bonanza given the change in sentiment and the two forces are obviously acting in different ways on inflation," Abir said. "It’s very difficult at the moment to know which will have a stronger effect."
The central bank’s policy has successfully brought inflation back to target while maintaining market stability, according to Abir.
"We don’t want to ruin that, so we are still going to be cautious going forward. We are not going to rush ahead with (lowering rates) just because there has been a cessation of hostilities for the last week or two," he added.
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