“Israel” Counts Cost of War

By Staff, Agencies 

Amid its continuous aggression on besieged Gaza strip, “Israel” is still suffering the repercussions of Al-Aqsa Flood on more than one level.

The entity’s central bank revised down its economic growth forecast on Monday amid risks arising from the war on Gaza.

The outlook assumes that the conflict will deal the main blow to the “Israeli” economy in the fourth quarter of the year. Although the regulator left interest rates unchanged as policymakers focused on propping up the shekel after it slumped to an 11-year low, it warned that a wider war would affect its policy further. 

The central bank held its benchmark interest rate at 4.75% – the highest level since late 2006.

“The interest rate path, and the use of additional monetary policy tools, will be determined in accordance with this purpose and with developments in the war, as well as with data on economic activity and the inflation dynamics, in order to continue supporting the markets’ stability and achieving the policy objectives and the needs of the economy,” the central bank said.

The “Israeli shekel” has dropped every day since October 7.

Along with the shekel’s depreciation, which represents a major inflationary risk, the regulator warned of a huge disruption to the economy that would crimp consumer demand for goods and services. Demand and supply are both expected to remain constrained due to labor shortages following mobilization, and the destruction of infrastructure.