# The Expected Rate of Inflation and Changes in the (M1) Money Supply

The Expected Rate of Inflation and Changes in the (M1) Money Supply 17.2.2008

Expected inflation rate (percent) M1 money supply Calculated from capital marketa Average of the inflation forecastsb 12 months forward Average monthly balance (NIS billion) Rate of change (percent) For first year 2.2 3.8 5.4 2.0 30.6 2.7 4.9 0.7 2.6 2.8 1.6 33.0 1.7 7.7 1.4 1.9 3.5 2.0 38.9 1.3 18.0 1.7 2.1 2.6 1.9 48.2 3.0 23.8 1.9 2.2 2.7 1.7 48.5 0.8 21.9 2.2 2.4 2.7 2.1 48.5 -0.1 20.0 2.1 2.5 2.7 2.2 48.9 0.7 19.3 1.9 2.3 2.7 2.2 49.7 1.8 16.8 2.0 2.1 2.7 1.9 49.0 -1.5 16.3 1.8 2.1 2.6 1.8 49.6 1.3 15.1 1.8 2.0 2.7 2.0 50.7 2.3 14.1 1.9 2.0 2.6 2.1 50.7 0.0 12.9 1.9 2.0 2.5 2.0 50.7 -0.1 11.5 1.4 1.5 2.5 1.4 49.7 -2.0 5.1 1.5 1.7 2.3 1.7 49.8 0.3 6.6 1.2 1.6 2.1 1.7 52.1 4.5 8.2 1.1 1.3 2.3 1.7 51.8 -0.6 6.8 1.4 1.6 2.2 1.9 52.9 2.0 9.0 1.3 1.7 2.0 2.0 54.4 2.9 11.3 0.5 1.1 2.1 1.7 55.1 1.3 10.8 0.7 1.3 2.2 1.2 55.2 0.1 12.7 1.8 2.2 2.4 1.8 57.4 4.0 15.7 1.9 2.5 2.4 2.7 59.3 3.4 16.9 1.7 2.1 2.4 2.6 61.4 3.5 21.0 1.2 1.7 2.5 1.6 61.1 -0.4 20.6 1.2 1.7 2.4 1.7 59.9 -2.0 20.6 1.4 1.8 2.4 2.0 60.0 0.1 20.4 2.1 2.4 2.5 2.5 61.5 2.4 17.9 2.6 2.2 2.5 2.6 60.5 -1.6 16.8 2.5 2.2 2.6 2.5

 a Inflation expectations are defined as break-even inflation and they include a risk-premium component. An explanation for how the expectations are calculated is available at the following address: http://bankisrael.gov.il/deptdata/monetar/m1_exp_e.pdf b Simple arithmetic mean of the inflation forecasts of the commercial banks and economic consultancy companies that publish their forecasts on a regular basis. c The percentage change in the level in the current month compared with the level in the equivalent month in the previous year. d Money supply data are preliminary data. e Average inflation expectations over previous thirty days