Shekel Unfazed By Aggressive Easing

January 2007 | Market Strategy

Our positive view of the shekel continues to play out, with the unit remaining more or less stable since the Bank of Israel unexpectedly cut its base lending rate by 50bps to 4.50% last week, 75bps below the US Federal Funds rate. We feel this latest decision was perhaps slightly rash, particularly since it took the market by surprise. There had been little indication from the BoI that this action was likely to be taken, and previous monetary policy statements had said that monetary easing was likely to be 'gradual' once Israeli rates fell below those in the US. Our

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