Economics
Fed left rates unchanged on October 16
Core CPI rose 0.2% in September while Israel kept its policy rate unchanged.
On October 16 the Federal Reserve kept its target rate unchanged, signaling no immediate tightening. Five days later, on October 21, the Bank of Israel also left its policy rate steady, mirroring the Fed's stance. The latest data showed Core consumer prices in the United States rose 0.2% month-over-month in September.
By rejecting a 25-basis-point Hike, the central Bank indicated that recent price pressures remained modest. The unchanged stance kept borrowing costs at their current level for borrowers and lenders.
Israel's monetary authority reached a similar conclusion after reviewing domestic price dynamics and growth outlook. Maintaining the rate avoided the need for a policy shift that could affect credit conditions. The decision was announced on Wednesday, confirming the central Bank's commitment to a cautious approach.
The 0.2% rise in Core CPI represents the most recent monthly Change in the Core price index, which excludes food and energy. The modest Increase suggests that underlying inflationary forces are not accelerating. The figure was released on Thursday, providing the latest gauge of price stability.
Analysis
Holding rates steady in both the United States and Israel signals that each central Bank judges current inflation pressures as insufficient to warrant further tightening.
However, the absence of a rate Hike also means that any future rise in inflation could require a more aggressive response later on.
Uncertainty remains around the trajectory of Core inflation and external factors such as commodity prices or geopolitical developments. If underlying price pressures pick up or economic conditions deteriorate, both banks may need to reassess their stance despite the current modest readings.
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