Maintaining Price Stability: The Bank of Israel's Sixth Decade Dr. - PowerPoint PPT Presentation

Maintaining Price Stability: The Bank of Israel's Sixth Decade Dr. Karnit Flug Governor of the Bank of Israel December 14, 2015 1

Actual Inflation and Inflation Expectations 2003-2015 SOURCE : CBS (Israel) & BOI 2

100 110 80 90 -4 -2 0 2 4 3 01/07 03/07 04/07 06/07 07/07 SOURCE : CBS (Israel) & BOI 09/07 10/07 12/07 01/08 03/08 04/08 06/08 07/08 09/08 2007 - 2015 Developments in the Background of Policy 10/08 12/08 01/09 03/09 04/09 06/09 07/09 09/09 10/09 12/09 01/10 03/10 04/10 06/10 07/10 09/10 10/10 12/10 01/11 03/11 04/11 06/11 07/11 09/11 10/11 12/11 01/12 03/12 04/12 06/12 07/12 09/12 10/12 12/12 01/13 03/13 04/13 06/13 07/13 09/13 10/13 12/13 01/14 04/14 03/14 07/14 06/14 10/14 09/14 01/15 12/14 04/15 03/15 07/15 06/15 10/15 09/15 Nominal Effective Exchange Rate Target Range Inflation and Output Gap

115 135 155 175 195 215 235 index 75 95 4 01/03 07/03 SOURCE : CBS (Israel) & BOI 01/04 07/04 2003-2015 Survey of home price and loans for residential purposes 01/05 07/05 01/06 07/06 01/07 Loans for residential 07/07 01/08 purposes 07/08 01/09 07/09 01/10 07/10 01/11 07/11 home prices Survey of 01/12 07/12 01/13 07/13 01/14 07/14 01/15 07/15

10/15 10/15 10/15 0.1 Natural Gas Purchase program 05/15 05/15 05/15 requirements 12/14 12/14 Higher capital 12/14 + Intervention 07/14 07/14 07/14 02/14 02/14 limit and requirem 02/14 capital PTI ent 09/13 09/13 09/13 requirements for high LTV 04/13 04/13 04/13 capital Higher 11/12 11/12 11/12 06/12 06/12 06/12 limit LTV 01/12 01/12 01/12 08/11 08/11 Variable Interest 08/11 Bank of Israel policy tools Rate limit 03/11 03/11 03/11 requireme high LTV Higher capital nts for 10/10 10/10 10/10 Intervention 05/10 05/10 05/10 5 billion $ for high LTV Additional QE provision 12/09 12/09 loans 12/09 07/09 07/09 07/09 02/09 02/09 Building reserves 02/09 09/08 09/08 09/08 04/08 04/08 04/08 2007-2015 11/07 11/07 11/07 06/07 06/07 06/07 01/07 01/07 01/07 SOURCE : BOI Macroprudential 5 4 3 2 1 0 3,000 2,500 2,000 1,500 1,000 500 0 5 4 3 2 1 0 Measures Intervention Interest Rate (US$) (%) FX 5

Thank you 6