main economic background data to the monetary committee ...€¦ · 1 main economic background data...
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1
Main economic background data to the Monetary Committee’s Interest
Rate decision, February 26, 2018
2
The Monetary-Financial Environment
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Based on Central Bureau of Statistics.
-2
-1
0
1
2
3
% Figure 1: The Contribution of Main CPI Components to Annual Inflation
January 2014 - January 2018
Housing (25%) Communications (2.5%)Food (13.7%) Vegetables and fruit (2.9%)Energy (5.9%) Other Components* (50%)Overall CPI Inflation Target
* "Other components" includes Health; Education, Culture and Entertainment; Furniture and Household Equipment; Clothing and
Footwear; Miscellaneous; and the Dwellings Maintenance and Transport components minus the sub-components relating to
energy prices.
Temporary decline in annual inflation is expected
in the coming months.
Inflation is still being affected by the price
reductions initiated by the government.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Based on Central Bureau of Statistics and Bank of Israel.
-2.0
-1.0
0.0
1.0
2.0
3.0
%
Figure 2: The Consumer Price Index - Overall, and Excluding Energy,
Vegetables and Fruit and Administrative Changes
Annual change, January 2014 - January 2018
CPI excluding Energy, Vegetables and Fruit and government initiated price reductionsCPI excluding government initiated price reductionsOverall CPIInflation Target
0.6
0.4
0.1
Inflation in the prices of nontradable goods moderated
and inflation in the price of tradable goods increased.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Bank of Israel.
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
Tradable goods price index (36.6%)
Other tradable goods (91%)
Energy excluding electricity and household gas (9%)
Tradable goods index
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
Nontradable goods price index (63.4%)
Other nontradable goods (57.1%)Fruit and vegetables (4.1%)communication (3.9%)Housing (39%)Nontradable goods index
Figure 3: Rate of change over preceding 12 months, January 2015 - January 2018
One-year inflation expectations increased, but
remain below the target.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Bank of Israel.
-1
0
1
2
3
Figure 4: One-Year Inflation Expectations from Various Sources*
Daily data, March 2017 - February 2018
Average According to the bank's internal interest rates Capital marketAverage forecasters' projections Inflation Target
** The series is the moving average of the last two weeks , after the 23.01.18 the data is daily data.
* Up to date as of Jan 23, 2018
Previous
interest rate
decision
Medium-range expectations also increased.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Bank of Israel.
1.3
1.5
2.1
1.0
0
1
2
3
% Figure 5: Forward inflation expectations to various ranges
Seasonally adjusted daily data, March 2017 - February 2018
1-2 2-3 3-5 5-10 Inflation Target
* For instance, 3-5 year expectations are the expected yearly inflation from the end of the 3rd year until the end of the 5th year.
Previous
interest rate
decision
The shekel weakened since the last interest rate
decision. In recent days, the depreciation has halted.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Bank of Israel
3.3
3.4
3.5
3.6
3.7
3.8
3.9
4.0
4.1
4.2
4.3
4.4
4.5
75.0
76.5
78.0
79.5
81.0
82.5
84.0
85.5
87.0
88.5
90.0
03/16 05/16 07/16 09/16 11/16 01/17 03/17 05/17 07/17 09/17 11/17 01/18
NIS Index Figure 6: The NIS/$, NIS/€, and Nominal Effective Exchange Rates
Jan. 1/2010 = 100, March 2016 - February 2018
Nominal effective NIS/€ NIS/$
Previous
interest rate
decision
Government bond yields in Israel increased less
than in the US, and similar to Europe.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Bloomberg.
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
03-16 05-16 07-16 09-16 11-16 01-17 03-17 05-17 07-17 09-17 11-17 01-18
%
Figure 7: Nominal Yields on 10 year Sovereign Bonds in Israel, US, and
Germany
March 2016 - February 2018
Israel US Germany
Previous
interest rate
decision
Recent data show a decline in home prices.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Central Bureau of Statistics
95
100
105
110
115
120
125
Housing index Home prices
Figure 8: Home Prices vs. the CPI Housing Index (based on residential rents)
January 2014 - January 2018
The pace of new mortgages has stabilized.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Bank of Israel.
0
1
2
3
4
5
6
0
1
2
3
4
5
6
7
8
01
/11
04
/11
07
/11
10
/11
01
/12
04
/12
07
/12
10
/12
01
/13
04
/13
07
/13
10
/13
01
/14
04
/14
07
/14
10
/14
01
/15
04
/15
07
/15
10
/15
01
/16
04
/16
07/1
6 1
0/1
6 0
1/1
7 0
4/1
7 0
7/1
7 1
0/1
7 0
1/1
8
% NIS
billion Figure 9: New Mortgages and the Weighted Interest Rate
January 2011 - January 2018
Total of new mortgages in the current monthSeasonally adjusted volume of new mortgagesWeigheted real interest rate (right scale)
Note: In order to calculate the real weighted interest rate, inflation of 2 percent is deducted from the unindexed components.
12
Real economic activity
The first estimate indicates solid GDP growth in
the fourth quarter.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Central Bureau of Statistics and bank of Israel.
4.3
6.9
3.6
2.3
3.7
3.2
1.9
6.2
2.4
0.1
1.5
4.2 4.5
5.4
4.1
4.8
1.1
3.1
3.9 3.6
3.3 3.4 3.5
0
1
2
3
4
5
6
7
8
9
10
% Figure 10: GDP Growth in Israel
Quarterly in annual terms, 2013 - 2017
Research Department's
forecast of annual growth
2017:Q4 2017:Q3 2017:Q2 2017:Q1 2017 2016 2015 Period
3.6 3.9 3.1 1.1 3.3 4 2.6 Gross Domestic Product
3.7 4.5 3.4 0.2 3.5 4.2 2.7 Business product
1.3 6.9 5.8 1.1 3.3 6.1 3.9 Private consumption
4 6.7 4.4 4.3 4.4 4.9 4.3
of which: private consumption excluding
durable goods
11.5 3.3- 2.9 7.2 4 4 3.8 Public consumption (excl. defense imports)
5.3- 1.3 7.1 4.6- 2.8 11.2 0.9- Fixed capital formation excl. ships and aircraft
4.3- 4.7 11.6 6.8- 3.5 12.9 2.1-
of which: Investment in industries excl. ships
and aircraft
10.2- 5.2- 2.4- 2.8 1.3 8.1 1.5
Investment in residential
construction
9.3 7.4 7.7 4.8 5.3 1.1 0.9-
Exports (excl. diamonds and startup
companies)
0.9 4.8 4.1 1.8 2.5 1.2- 3.3- of which: Goods exports excl. diamonds
19.1 5.3 14 11.3 8.7 4.2 2.8
Services exports excl. startup
companies
9 16.3 8.1 1.7- 6.1 8.1 1.6
Civilian imports (excl. ships, aircraft and
diamonds)
Growth in 2017 was more balanced, led by
private consumption and exports.
Figure 11: Growth Rates of the Components of the National Accounts, 2015–2017
SOURCE: Central Bureau of Statistics.
The quarterly rates of change are
seasonally adjusted in annual terms.
Services exports led export growth.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Central Bureau of Statistics.
0.90
0.95
1.00
1.05
1.10
1.15
Figure 12: Export Data Taken from the National Accounts
Seasonally adjusted quarterly data, Real index: 2016 average=1.0,
Q4 2014 – Q4 2017
Totel exports (excl. startups and diamonds) Services exports excl. startups Goods exports excl. diamonds
The Composite State of the Economy Index
indicates continued solid growth.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Bank of Israel.
-0.2
-0.1
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Figure 13: The Composite State of the Economy Index
Seasonally adjusted monthly data, January 2014 - January 2018
The labor market is tight and in a full
employment environment.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Central Bureau of Statistics.
3.4
3.8
4.2
4.6
5.0
5.4
5.8
6.2
70
72
74
76
78
80
82
84
% %
Figure 14: The Unemployment, Employment and Participation Rates
Among the Primary Working Ages (25-64)
Seasonally adjusted monthly data, January 2013 - December 2017
Employment rate (left scale) Participation rate (left scale) Unemployment rate (right scale)
80.4
77.6
3.5
Following a prolonged increase, the pace of wages
increases has moderated.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Central Bureau of Statistics and Bank of Israel calculations.
0
1
2
3
4
5
6
%
Figure 15: Nominal Wages per Employee Post
Seasonally adjusted, moving 6-month average, rate of change compared
with the same period in the previous year, January 2013 - November 2017
Business sector Total Public services
3.5
2.9
2.7
Increasing ratio between number of job vacancies
and the number of unemployed.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Central Bureau of Statistics.
40
50
60
70
80
90
100
110
120
150
170
190
210
230
250
270
Number of job vacancies
Number of unemployed
Figure 16: Number of Job Vacancies and Number of Unemployed
Thousands, seasonally adjusted, January 2012 - December 2017
20
The global economy
The IMF has revised its growth forecasts upward.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: IMF
1.5 1.8
0.9
6.7
3.2
4.4
2.3
US Europe Japan China World Emerging World Trade
Figure 17: The IMF Growth Forecast
October 2017 - February 2018
2016 2017 forecast 2018 forecast
* The numbers in parentheses show the previous forecast.
2.2
2.7
(2.3)
2.1 2.2
(1.9)
1.5 1.2
(0.7)
6.8 6.6
(6.5)
3.6
3.9
(3.7)
4.7
(4.6)
4.9 4.7
(4.2)
4.6
(4)
Momentum in world trade is maintained.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Bloomberg.
-1
0
1
2
3
4
5
6
7%
Figure 18: Annual Rate of Change in Global Trade in Commodities
January 2013 - December 2017
World Emerging economies Advanced economies
4.4
4.6 4.7
The “correction” in the global stock markets has
been halted for now.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Bloomberg.
90
100
110
120
130
02/17 03/17 04/17 05/17 06/17 07/17 08/17 09/17 10/17 11/17 12/17 01/18 02/18
Figure 19: The Major Global Equity Indices
February 2017 - February 2018
S&P 500 Nikkei 225 MSCI EM EuroStoxx 50
Index:
Feb 23/2017=100
Inflation remains below the central bank targets.
Inflation in Israel is low relative to the major economies.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Bloomberg.
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Figure 20: Inflation in the Major Economies and in Israel
January 2013 - January 2018
US - CORE PCE Eurozone Japan Israel Inflation target in the major economies
%
1.5
1.3
0.1
1.4
* For Japan, net of the effect of the VAT increase in 2014.
** The target in the US relates to CORE PCE.
%
Oil prices are volatile after a prolonged increase.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Bloomberg.
80
90
100
110
120
130
140
02/17 03/17 04/17 05/17 06/17 07/17 08/17 09/17 10/17 11/17 12/17 01/18 02/18
Figure 21: Indices of Commodity Prices
February 2017 - February 2018
Commodities excluding energy Brent crude oil
Index:
Feb 23/2017=100
Previous
interest rate
decision
The interest rate increases in the US are expected
to continue.
ס ועיבודי בנק ישראל"למ: מקור
SOURCE: Bloomberg.
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
ECB Japan US (mid-range interest rate) Israel
%
1.375
0.1
-0.1
-0.4
Figure 22: Interest Rates of the Major Central Banks and the Bank of Israel
January 2013 - January 2018