Bank of Israel is to increase bond purchase and remains interest rate at 0.1%.

The central bank of Israel announced to hold interest rate at 0.1% with expansion of its government bond-purchase by NIS 35 billion ($10.3 billion) to stimulate economic activity and to stabilize the financial market.  

The central bank assumes the nation's GDP to decrease by 5% in this year, and contract by 6.5% in the following year (2021). The forecast applies when the nation is taking effective countermeasures against the pandemic. However, in the worst case, the economy is expected to shrink by 6.5% in 2020, and grow by 1 % next year.

Central bank’s purchase can help Israeli’s small business

Bond purchasing program will expand to NIS 50 billion in the secondary market to ease credit terms and to stabilize and support financial market and economy. Government bond purchases totaled about NIS 33.6 billion until September, according to central bank. The Monetary Committee, which is part of Bank of Israel for achieving the Bank’s objectives (mostly monetary policy), launched new programs of NIS 10 billion to support small business. The bank will provide fixed interest rate of negative 0.1% for commercial banks to encourage the loans for small and micro business. 

The number of unemployed became 470,000 in the first half of September due to the lockdown. The inflation rate in the past 12months has dropped by 0.7%, which is in need of support of policy mix programs.

Source : The Times of Israel

https://www.timesofisrael.com/bank-of-israel-leaves-interest-rate-unchanged-at-0-1-to-increase-bond-purchases/