ISRAEL - May 8 - Interest Rates To Be Cut.
PM Sharon says he will intervene in the 4-month-old labour dispute
which has prevented the Bank of Israel from cutting the interest rates
expected at end-April. He is to hold discussions with the Governor of
the Central Bank David Klein. Sharon tells foreign journalists:
"Something will be done in the next couple of days when I just have
one free minute". He adds he can see "no justification"
in postponing a cut in the base interest rate, which was last cut at
end-March from 7.5% to 7.2% (Israel's economy has been hit
significantly by the intifada, which has slowed construction activity
and led to a slump in tourism, as well as by the worldwide slump in
high-technology sectors. The Bank of Israel's forecast for economic
growth in 2001 has been downgraded to 2 to 2.5%, compared with the 4 to
4.5% expected for 2001 in official forecasts release mid-2000. The head
of UBS Warburg in Israel Stephen Levey said there was "no doubt the
interest rates should be cut" but warned that the main factor
affecting the growth outlook, "are not going to be helped by a cut
in interest rates").