Bank of Israel holds interest rate discussions at two levels…

This report from Bank of Israel caught my eye. Most central bank call such reports as Minutes of Monetary Policy Committee meeting. However, BoI euphemistically calls it as Report to the public on interest rate discussions.

It does not end there. In BoI, the interest rate discussions are held at two levels, broad and narrow. Spot the differences between the two:

In the process of making the interest rate decision by the Monetary Committee, discussions are held at two levels––the first in a broad forum, and the second in a narrower one.

In the broad-forum discussion, the relevant background economic conditions are presented, including the real and financial-monetary developments in Israel’s economy, and developments in the global economy. Participants in this discussion include the members of the Monetary Committee, senior representatives from the various departments of the Bank, and economists from the economic departments (Research and Market Operations), who prepare and present the material for discussion.

In the narrow forum—which consists of the Monetary Committee and the Director of the Market Operations Department—the Research and the Market Operations Departments’ recommendations regarding the interest rate are presented. An open discussion on monetary policy follows, which ends with a vote on the level of the  interest rate. According to Section 18(c) of the Bank of Israel Law, 5770–2010, the decision on the interest rate is reached by majority vote of the members of the Monetary Committee who participate in the voting. If the vote is tied, the Chairperson (the Governor) has an additional vote.

Phew..So much so for so many cooks…




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