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12 economists polled by Reuters believe the monetary policy
committee (MPC) will keep its benchmark rate <ILINR=ECI> at 0.1%
when the decision is announced on Monday at 4 p.m. (1300 GMT.
On April 6, the MPC lowered the rate from 0.25% for its first
cut in five years, while also signalling a willingness to move
to negative rates if the economy deteriorates much further.
Economists, though, believe the central bank will opt to keep
rates positive for now, especially with the economy opening
faster than expected six weeks ago.
"Negative rates will do more harm than good," said Ofer Klein,
head of economics and research at Harel Insurance and Finance.
Instead, analysts believe, the central bank will stick to other
policies such as foreign-exchange market intervention.
Israel's economy struggled under government restrictions that
required most Israelis to stay at home, with the number of job
seekers peaking above 1 million. Nearly 150,000 have returned to
work and next week restaurants are slated to re-open, joining
schools and shopping malls.
Of the 16,665 Israelis infected with the virus, most with mild
symptoms, just 2,812 remain sick while 279 have died.
Israel's government has proposed a 100 billion-shekel ($28
billion) aid package to help the economy. Bank of Israel
Governor Amir Yaron has supported the action, saying now is not
the time to tighten spending.
For all of 2020, the central bank forecasts an economic
contraction of 5.3%, rebounding to grow 8.7% next year. Its own
economists project the interest rate will between 0% and 0.1% in
2020 and fall to 0-0.25% in 2021.
Israel's annual inflation rate fell to -0.6% in April from 0% in
March, well below an official 1-3% target.
(Reporting by Steven Scheer, editing by Larry King)
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