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4 - Inflation and Monetary Policy

from Part I - Government Policy and Macroeconomic Developments

Published online by Cambridge University Press:  04 February 2021

By
Sigal Ribon
Edited by
Avi Ben-Bassat ,
Reuben Gronau  and
Asaf Zussman
Avi Ben-Bassat
Affiliation:
Hebrew University of Jerusalem
Reuben Gronau
Affiliation:
Hebrew University of Jerusalem
Asaf Zussman
Affiliation:
Hebrew University of Jerusalem
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Summary

This chapter presents an overview of the development of inflation and monetary policy in Israel since the early 2000s. Unlike the discussion in the previous book, which centered on the disinflation process and the transformation of the economic and institutional environment as a result of the Stabilization Program in the mid-1980s (Ben-Bassat, 2001, Section II), the setting of the current chapter is of a large external shock: the 2008 global financial crisis against the background of a relatively stable domestic environment of economic policy — monetary and fiscal — and of inflation. The chapter describes inflation and its characteristics, monetary policy, and the mechanisms of transmission from policy to inflation. It focuses on recent years, those following the financial crisis, which have been typified, in Israel and abroad, by a low-inflation environment in view of very accommodative monetary policies. The last section concludes the chapter and offers some thoughts going forward.

Keywords

Monetary policyinflationinflation targetinflation expectationstransmission mechanismBank of Israel
Type
Chapter
Information
The Israeli Economy, 1995–2017
Light and Shadow in a Market Economy
 , pp. 103 - 137
Publisher: Cambridge University Press
Print publication year: 2021

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