This document presents the forecast of macroeconomic developments compiled by the Bank of Israel Research Department in September 2013. The forecast was presented to the Monetary Committee on September 22, 2013 during its meeting prior to the decision on the Bank of Israel interest rate for October 2013. According to the staff forecast, the rate of inflation over the next year (ending in the third quarter of 2014) is expected to be 1.9 percent. The Bank of Israel interest rate, which was 1.25 percent when the forecast was compiled, is expected to decline in the final quarter of the year to 1 percent, and to remain at this level until the middle of 2014, and then to increase and stand at 1.25 percent at the end of 2014. Gross domestic product (GDP) is projected to grow by 3.6 percent in 2013 and by 3.4 percent in 2014.  In the previous forecast, compiled in June, it was assessed that GDP will grow by 3.8 percent in 2013 and by 3.2 percent in 2014.
In addition to the baseline forecast, we present a fan chart which presents the risks to the baseline forecast.



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