Inflation and Monetary Policy

doi:10.1017/9781108907620.005

4 - Inflation and Monetary Policy

from Part I - Government Policy and Macroeconomic Developments

Published online by Cambridge University Press: 04 February 2021

Edited by

Reuben Gronau and

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 policy inflation inflation target inflation expectations transmission mechanism Bank of Israel

Type: Chapter
Information: The Israeli Economy, 1995–2017
Light and Shadow in a Market Economy
, pp. 103 - 137

DOI: https://doi.org/10.1017/9781108907620.005 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2021

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