Changes in money supply and expected inflation

August 17, 2000


Table 1: Changes in money supply (M1) and the expected inflation


Expected inflation (monthly average, %)
M1 money supply
Average of one-yeard inflation forecastsf
From capital marketc
Rate of change (%)
Average monthly balance (NIS billion)
Second yearf
One year d
Previous 12 monthsb
Monthlya
1999
January
4.9
6.6
6.2
12.5
0.7
20.4
February
5.2
6.0
5.5
-2.3
20.0
March
5.3
4.6
5.5
4.1
20.8
April
5.4
5.6
5.6
-0.3
20.7
May
5.6
5.8
6.9
0.2
20.8
June
5.3
4.9
5.8
1.1
21.0
July
4.9
4.4
4.4
4.7
22.0
August
5.0
5.9
5.6
0.6
22.1
September
5.1
6.0
6.2
1.5
22.5
October
4.9
5.4
5.1
-2.3
21.9
November
4.5
4.2
3.7
0.1
22.0
December
4.1
3.7
2.9
7.1
23.5
2000
January
3.7
3.0
2.6
13.9
-1.0
23.3
February
3.7
2.6
2.9
13.3
-2.9
22.6
March
3.4
2.6
2.5
9.8
1.0
22.8
April
3.6
3.3
2.9
13.4
3.0
23.5
May
3.9
3.0
3.7
12.1
1.0
23.3
June
4.0
2.9
3.6
13.1
2.0
23.7
Julyg
3.6
2.1
2.5
10.3
2.2
24.3
a The percentage change in the average level in the current month compared with the average level of the previous month.
b The percentage change in the average level in the current month compared with the average level of the same month in the previous year.
c The method of calculating expectations is explained in Appendix 1 of the Inflation Report for July-December 1999 (No. 5).
d The next twelve months (based on gross returns on Treasury bills and on fixed-rate CPI-indexed bonds (Galil or Sagi) for equivalent terms).
e From the thirteenth to the twenty-fourth month from any point in time (based on gross returns on fixed-rate unindexed bonds (Shahar) and fixed-rate CPI-indexed bonds (Galil or Sagi) for equivalent terms).
f The simple average of inflation forecasts by three commercial banks and two economic consultancy companies which regularly publish inflation forecasts.
g Preliminary data.

The Bank of Israel points out that much data and many indicators of the state of the economy are taken into account in the monthly discussions on monetary planning; these include inflation expectations, changes in a range of price indices, the monetary aggregates, rates of exchange, capital flows, the extent and composition of economic activity, the labor market, and the balance of payments.


Table 2: Changes in the exchange rate and the actual inflation rate


Change in exchange rate (monthly average, %)
Actual rate of inflation (%)
NIS/$
NIS/currency basket
Previous 12 monthsb
Monthlya
Previous 12 monthsd
Monthlyc
Previous 12 monthsd
Monthlyc
1999
January
14.1
-2.3
17.0
-2.4
7.8
-0.5
February
13.2
-0.3
14.6
-1.4
7.0
-0.8
March
12.4
-0.9
13.0
-1.7
7.0
-0.2
April
9.6
0.7
9.6
0.3
5.9
0.3
May
12.2
1.4
11.8
1.2
6.0
0.5
June
11.6
-0.7
10.8
-1.3
5.9
0.3
July
11.9
0.2
11.1
0.0
6.3
0.3
August
13.4
2.6
13.7
3.6
6.3
0.5
September
10.5
1.0
9.2
1.3
5.3
0.5
October
1.7
0.4
-0.5
1.1
2.9
0.7
November
0.0
-0.9
-2.2
-1.8
1.4
-0.2
December
0.4
-0.8
-2.5
-1.2
1.3
0.0
2000
January
0.6
-2.1
-2.1
-2.0
1.3
-0.5
February
-0.3
-1.2
-3.0
-2.3
1.6
-0.5
March
-0.7
-1.2
-2.9
-1.6
1.5
-0.3
April
-0.5
0.9
-2.5
0.7
1.7
0.5
May
0.7
2.6
-2.6
1.1
2.1
0.9
June
0.4
0.9
1.1
0.2
2.1
0.3
July
0.2
0.4
1.9
0.7
2.1
0.3
a The percentage change in the Consumer Price Index (CPI) in the current month compared with the CPI in the previous month.
b The percentage change in the CPI in the current month compared with the CPI in the same month in the previous year.
c The percentage change in the average exchange rate in the current month compared with the average exchange rate in the previous month .
d The percentage change in the average exchange rate in the current month compared with the average exchange rate in the same month in the previous year.