The Bank of Israel updated its annual inflation forecast for the next 12 months to 2.5 percent. The move followed a period where the inflation rate exceeded the government target of 1.3 percent and after the consumer price index in July dropped 0.3 percent. The inflation rate in July was initially placed at 3.8 percent but was reduced to 2.9 percent. Due to the drop in the inflation rate, Bank of Israel governor Stanley Fischer may reduce the interest rate from 3.25 percent to 3 percent next week, in an effort to curb the slow down and prevent recession. A reduced interest rate may also assist the stock exchange following significant falls in recent weeks.
