(Adds details, central bank comments)
By Steven Scheer
JERUSALEM, Sept 12 Israeli policymakers left
short-term interest rates unchanged last month partly on a
robust labour market, but they warned that further problems in
firms filling job openings could harm future growth.
All four rate setters on the Bank of Israel's monetary
policy committee (MPC) voted to hold the benchmark rate
at 0.1 percent on Aug. 29, minutes of the
discussions showed on Monday, which came after
stronger-than-expected second-quarter growth data.
As has been the recent trend, growth was driven by consumer
spending, particularly on big-ticket items, while exports showed
For the first half of 2016, the economy grew an annualised
2.9 percent, which MPC members said reflected a "growth rate
consistent with a robust labour market."
They noted the low jobless numbers - the unemployment rate
in the second quarter was 4.8 percent - was accompanied by a
continued rise in job vacancies.
"The Committee referred to the increasing difficulty in
filling job vacancies, and not only in high tech industries.
This difficulty, if it continues to increase, is liable to serve
as a limitation on the growth rate in the future," the central
bank's minutes said.
The Bank of Israel projects economic growth of 2.4 percent
in 2016, similar to last year, but is expected to raise its
estimate later this month.
Earlier this year, policymakers had been concerned over weak
economic growth. But in its September rates decision, it omitted
a warning over risks to growth that had been part of its
statements for a year, while only keeping a warning of a risk to
attaining the government's 1-3 percent annual inflation target.
In keeping rates unchanged for an 18th straight month, the
Bank of Israel pointed to an improvement in the deflation trend,
which it said is largely a result of the low level of inflation
abroad. Israel's annual inflation rate was -0.6 percent in July,
compared with -0.8 percent in June.
Policymakers also cited high housing prices, even though the
rate of increase has moderated slightly.
"Committee members assessed that the current interest rate
environment supports a continued trend of growth and employment,
while the main risks to continued growth are liable to derive
mainly from negative developments in the world," the minutes
said, reiterating that monetary policy in Israel will remain
accommodative for a considerable time.
(Reporting by Steven Scheer; Editing by Toby Chopra)