Changes in money supply and expected inflation

July 16,2001

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

Expected inflation rate (monthly average,%)
M1 money supply
Expectations from capital market
Rate of change (%)
Average monthly blance (NIS
Average of inflation forecasts for first yearf
Third year and beyonde

Second yeard
First yearc
Previous 12 monthsb

Monthlya
billion)
1999
December
4.1
5.1
3.7
2.9
14.3
7.1
23.5
2000
January
3.7
3.9
3.0
2.6
13.9
-1.0
23.3
February
3.7
3.3
2.6
2.9
13.3
-2.9
22.6
March
3.4
2.9
2.6
2.5
9.8
1.0
22.8
April
3.6
3.4
3.3
2.9
13.3
2.9
23.5
May
3.9
2.9
3.0
3.7
12.1
-1.0
23.3
June
4.0
3.0
2.9
3.6
13.0
1.9
23.7
July
3.6
2.9
2.1
2.5
9.6
1.6
24.1
August
3.0
2.7
1.7
2.2
9.9
0.9
24.3
September
2.4
2.3
2.0
2.3
8.7
0.3
24.4
October
2.8
2.9
1.8
2.2
11.8
0.6
24.6
November
2.9
2.8
2.1
1.8
9.9
-1.7
24.1
December
2.5
2.2
1.4
0.8
7.5
4.8
25.3
2001
January
2.2
2.0
1.2
1.4
6.5
- 2
24.8
February
2.5
2.0
1.2
2
11.2
1.4
25.2
March
2.5
2.0
1.1
2
13.9
3.5
26.0
April
2.5
1.8
1.8
1.3
12.5
1.6
26.4
May
2.2
2.0
1.8
1.2
13.7
0.1
26.5
June g
2.0
2.0
2.3
1.8
13.8
2.0
27.0

a The change, in percent, from the average level in the previous month to the average level in the current month.
b The change, in percent, from the average level in the same month in the previous year to the average level in the current month.
c An explanation of the method of calculating inflation expectations can be found in Appendix 1 to the Inflation Report for July-December 1999 (Inflation Report No. 5).
d Based on returns on various bonds (Shahar, and Galil or Sagi) with equivalent terms to maturity.
e From July 2000—due to the extension of the issue term of Shahar bonds from five to seven years—the simple averages of inflation expectations for the third year to the seventh year, inclusive, are shown (based on returns on Shahar bonds and Galil or Sagi bonds for equivalent terms). Prior to July 2000 the figures shown are the simple averages of inflation expectations for the third year to the fifth year, inclusive.
f The simple average of inflation forecasts by commercial banks and economic consultants who publish their forecasts regularly.
g Preliminary data of the money supply.

The Bank of Israel states that in the monthly discussions on monetary planning a wide range of data and indicators of the state of the economy are taken into consideration, including inflation expectations, changes in a variety of price indices,the monetary aggregates, exchange rates, capital flows, the extent and composition of economic activity, the labor market, the balance of payments, etc.


Table 2: The actual rate of inflation and changes in the exchange 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
August
-3.7
-1.0
-7.2
-2.0
1.0
-0.6
September
-4.9
-0.2
-9.5
-1.2
0.0
-0.6
October
-3.7
1.7
-9.3
1.2
-0.1
0.6
November
-2.8
0.1
-7.7
0.0
0.1
0.0
December
-2.7
-0.7
-6.3
0.3
0.0
-0.1
2001
January
0.4
0.9
-2.6
1.8
-0.1
-0.6
February
1.7
0.1
-0.8
-0.5
0.3
-0.1
March
4.0
1.0
1.3
0.4
0.7
0.2
April
3.4
0.3
0.3
-0.3
1.2
0.9
May
-0.1
-0.9
-1.9
-1.2
0.7
0.4
June
1.4
0.5
-2.3
-0.1
0.7
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.