Analysts Divided On Today's Bank Of Israel Rate Decision

Spot USD/ILS trades -430 pips at 3.7217 ahead of the Bank of Israel's monetary policy decision due at 14:00BST/16:00IDT. A narrow majority of analysts looks for an on-hold outcome rather than a 25bp cut, but the margin is razor-thin (9 to 8 in a Bloomberg survey).

• Bank of America write that the BoI will likely reduce the key rate by 25bp to 4.25%, which would still be a restrictive level for the economy. They expect the BoI to continue to deliver cuts in a slow-paced cautious manner, given the downside to growth this year.
• Goldman Sachs expect the BoI to cut the policy rate by 25bp, despite noting that the recent depreciation of the shekel skews the risks towards a more hawkish outcome. They expect inflation momentum to remain benign and that gradual rate cuts will continue beyond this week's meeting, albeit continued shekel weakness could decrease the likelihood of further easing.
• HSBC see the BoI cutting rates by 25bp this week and sticking to a pace of -25bp/quarter this year and likely next year too. They see end-2024 and end-2025 key rate at 3.75% and 2.75% respectively.
• JP Morgan think that today's MPC meeting may seem like a coin toss, but the balance has shifted towards no-change in their view, due to increased geopolitical risk and dynamics in external markets. They still expect the BoI to cut by 75bp by the year-end, with risks increasingly skewed towards a shallower cutting cycle.