The CPI (מדד) was announced last night. This month it was 1.1%.
Last month it was 0.7%.
Right now, inflation is on course to reach 3.1% for the year. Since the country's budget is based upon expectations of 2-3% inflation, this means that more serious measures will be taken by Bank of Israel to fight inflation. For the consumer this means that interest rates will rise.
The banks have already been raising rates. Even though the Governor of the Bank of Israel has raised rates by only 0.25% over the last two months, the banks have raised interest on mortgages in most programs by over a full point during the same period.
Governor Frankel will raise interest rates again. As the banks have already raised their rates, we will probably see less action there. Look for something like a 0.5% rise for the official rates and an additional 0.25% on most mortgage programs.
This is good news for people who have savings. If you have savings, it would be best to move them into variable rate schemes now.
If you are buying a house and your income is in shekels, it is time to consider options other than the traditional fixed-rate indexed loan.
