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Interest rates rise again: Understanding what’s really happening in Israel’s economy

There are many reasons that Israel’s economy is one of the strongest in the world today. At first blush that’s great news.

But there are potentially negative side effects to that as well. As a great place to invest, and with interest rates so low, Israeli real estate has been a great investment the last few years. That has caused prices to go up dramatically causing inflation.

In order to slow the pace of investment, the government has pushed up interest rates again in an attempt to make mortgages and therefore real estate less attractive. But with increased prime interest rates in Israel, the Shekel becomes a very attractive currency, making it one of the strongest in the world today which actually hurts Israeli exports!

Here’s a fabulous editorial from the Jerusalem Post that serves as a primer in Israeli economics. Well worth the read, and easy to understand…

Fischers Priority: Fighting Inflation

Fischer's Priority: Fighting Inflation

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