Israel Faces Tough Call on Rates as War Clouds Economic Outlook - BNN Bloomberg | Canada News Media
Connect with us

Economy

Israel Faces Tough Call on Rates as War Clouds Economic Outlook – BNN Bloomberg

Published

 on


(Bloomberg) — The Bank of Israel is set for a close interest-rate call on Monday, with analysts almost evenly split between those predicting a cut to boost the war-damaged economy and those seeing monetary authorities keeping policy steady to protect the shekel.

A narrow majority of economists surveyed by Bloomberg — nine out of 17 — say the central bank will hold its base rate at 4.5% for a second consecutive Monetary Policy Committee meeting. Citigroup Inc. and JPMorgan Chase & Co. are among them.

The other eight, including Goldman Sachs Group Inc., see the MPC cutting the rate by 25 basis points to 4.25%.

The consensus shifted toward a hold last week after Iran vowed revenge against Israel for a strike on Tehran’s consulate in Damascus. The attack killed at least 13 people, including two Iranian generals. Israel put its forces on high alert. Israeli stocks dropped, while the shekel suffered its second-worst week this year.

The currency rebounded by 1.1% to 3.72 per dollar as of 9:40 a.m. in Tel Aviv on Monday, in part because Iran didn’t retaliate over the weekend.

The rising tensions contributed to Israel’s inflation outlook worsening in recent days, as measured by break-even rates. Two year break-evens have climbed to 3.17%, above the central bank’s target range of 1% to 3%.

“The increase in the risk premium of all Israeli assets combined with heightened inflation expectations, will likely place the Bank of Israel in a cautious position that will lead to a postponement in rate cuts,” said Rafael Gozlan, chief economist at Tel Aviv-based IBI Investment House.

The central bank lowered rates for the first time since the height of the covid pandemic in January, and in late February left them unchanged because of concern that inflation might accelerate as the war against Hamas in Gaza continues and the government ramps up spending on defense.

For now, inflation remains low. The year-on-year rate dropped to 2.5% last month from 4.1% in August.

“Markets have reduced the probability of a cut to 30%, but we think that chances are higher because inflation has entrenched within its target range,” said Gil Bufman, chief economist at Bank Leumi, Israel’s biggest lender by market valuation. “This could allow the bank to maintain a real interest rate of more than 1% even with a slight cut,” he said, referring to inflation-adjusted rates.

One concern for markets is the fiscal impact of the war. This year’s budget envisages a deficit of 6.6% of gross domestic product, a shortfall that would be among the biggest for Israel this century. It may turn out to be even wider if the conflict in Gaza is prolonged or if tensions with Iran and Lebanon-based Hezbollah — the Islamic Republic’s main proxy militia — worsen.

Amir Yaron, the Bank of Israel’s governor, has repeatedly said he’s concerned about fiscal policy and that it will be an important factor in determining monetary policy.

Israel’s current inflation rate “can be misleading” and “doesn’t necessarily indicate what’s in store for the future,” said Victor Bahar, chief economist at Bank Hapoalim, the second-biggest Israeli lender.

The central bank is due to release new macroeconomic forecasts after the rate decision. Jonathan Katz, a strategist at Leader Capital Market, says the bank will probably “stress its concern over a more expansionary fiscal policy.”

Katz expects the central bank’s inflation forecast for this year to rise toward 3%, up from 2.4% in January. He also sees the interest-rate outlook climbing to 4%-4.25% from 3.75%-4%.

The central bank will need to weigh rising inflation expectations against an uneven economic recovery from the first few weeks of the war. Many industries, including construction and tourism, are still suffering, even as credit-card spending rebounds.

“The economy is far from returning to its full growth potential,” said Alex Zabezhinsky, chief economist at Meitav DS Investments. “Keeping interest rates at a high level may reduce market volatility in the short term, but increase the risk to the economy and market stability moving forward.”

©2024 Bloomberg L.P.

Adblock test (Why?)



Source link

Continue Reading

Economy

Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

Published

 on

 

VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

N.B. election: Parties’ answers on treaty rights, taxes, Indigenous participation

Published

 on

 

FREDERICTON – The six chiefs of the Wolastoqey Nation in New Brunswick distributed a survey on Indigenous issues to political parties ahead of the provincial election, which is scheduled to kick off Thursday. Here are some of the answers from the Progressive Conservative, Liberal and Green parties.

Q: How does your party plan to demonstrate a renewed commitment to recognizing our joint treaty responsibilities and acknowledging that the lands and waters of this territory remain unceded?

Progressive Conservative: The party respectfully disagrees with the assertion that land title has been unceded. This is a legal question that has not been determined by the courts.

Liberal: When we form government, the first conversations the premier-designate will have is with First Nations leaders. We will publicly and explicitly acknowledge your treaty rights, and our joint responsibility as treaty people.

Green: The Green Party acknowledges that New Brunswick is situated on the unceded and unsurrendered territories of the Wolastoqiyik, Mi’kmaq and Peskotomuhkati peoples, covered by the Treaties of Peace and Friendship. Our party is committed to establishing true nation-to-nation relationships with First Nations, grounded in mutual respect and co-operation as the treaties intended.

Q: How does your party propose to approach the issue of provincial tax agreements with First Nations?

Progressive Conservative: The government of New Brunswick operates in a balanced and fair manner with all organizations, institutions and local governments that represent the citizens of this province, including First Nations. Therefore, we cannot offer tax agreements that do not demonstrate a benefit to all citizens.

Liberal: Recent discussions with First Nations chiefs shed light on the gaps that existed in the previous provincial tax agreements with First Nations. Our party is committed to negotiating and establishing new tax agreements with First Nations that address the local needs and priorities and ensure all parties have a fair deal.

Green: The Green Party is committed to fostering a respectful relationship with First Nations in New Brunswick and strongly opposes Premier Blaine Higgs’s decision to end tax-sharing agreements. We believe reinstating these agreements is crucial for supporting the economic development and job creation in First Nation communities.

Q: How will your party ensure more meaningful participation of Indigenous communities in provincial land use and resource management decision-making?

Progressive Conservative: The government of New Brunswick has invested significant resources in developing a robust duty to consult and engagement process. We are interested in fully involving First Nations in the development of natural resources, including natural gas development. We believe that the development of natural gas is better for the environment — because it allows for the shutdown of coal-fired power plants all over the globe — and it allows for a meaningful step along the path to reconciliation.

Liberal: Our party is focused on building strong relations with First Nations and their representatives based on mutual respect and a nation-to-nation relationship, with a shared understanding of treaty obligations and a recognition of your rights. This includes having First Nations at the table and engaged on all files, including land-use and resource management.

Green: We will develop a new Crown lands management framework with First Nations, focusing on shared management that respects the Peace and Friendship Treaties. We will enhance consultation by developing parameters for meaningful consultation with First Nations that will include a dispute resolution mechanism, so the courts become the last resort, not the default in the face of disagreements.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

Canadian Coast Guard crew member lost at sea off Newfoundland

Published

 on

 

ST. JOHN’S, N.L. – A crew member of a Canadian Coast Guard ship has been lost at sea off southern Newfoundland.

The agency said in a release Wednesday that an extensive search and rescue effort for the man was ended Tuesday evening.

He was reported missing on Monday morning when the CCGS Vincent Massey arrived in St. John’s, N.L.

The coast guard says there was an “immediate” search on the vessel for the crew member and when he wasn’t located the sea and air search began.

Wednesday’s announcement said the agency was “devastated to confirm” the crew member had been lost at sea, adding that decisions to end searches are “never taken lightly.”

The coast guard says the employee was last seen on board Sunday evening as the vessel sailed along the northeast coast of Newfoundland.

Spokeswoman Kariane Charron says no other details are being provided at this time and that the RCMP will be investigating the matter as a missing person case.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Trending

Exit mobile version