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The Bank of Israel is worried about inflationary pressures, which are forcing it to renew interest rate hikes.
Zeev Klein 4 May 06 12:37
The Bank of Israel is worried that, paralleling the ongoing rapid economic growth of the past 30 months, inflationary pressures have built up, which could increase the inflation rate. The Bank of Israel’s Review of Economic Developments states that it was necessary to renew interest rate hikes, after eight months of no change, partly for the following reasons:
The rise in domestic demand;
The depreciation of the shekel (during the period in which the review was written);
Israel’s output potential was close to being reached;
The shekel-dollar interest rate gap narrowed.
The inflation rate in the preceding 12 months exceeded the ceiling of the government’s 1-3% inflation target, reaching 3.6%.
In contrast to other assessments, the Bank of Israel says there has been no significant recovery as yet in the construction industry. The Bank of Israel stresses that prices for large apartments in the center of the country have risen, but that prices for small apartments and apartments in outlying areas have remained unchanged.

The Bank of Israel says there has been a recovery in housing starts only in demand areas in the center of the country, and the decline in housing starts in outlying areas is continuing. In addition, the recovery in the construction industry has been lower than the overall economic recovery. “Only demand for expensive luxury apartments has increased. In many parts of the country, there is a shortage of land for building, and in areas with no land shortage, there is no substantial increase in the number of housing starts,” states the review.

Published by Globes [online], Israel business news - www.globes.co.il - on May 4, 2006
 

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bla bla bla just one says it all together: tel aviv is only for rich, only rich buy the towers
 
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