Israeli monetary policy may deepen recession in response to global price shocks
The Israeli economy faces challenges from global price shocks, like changes in food and energy prices. The country's monetary policy aims to keep inflation low and stable while also minimizing economic ups and downs. Responding to external price shocks can be tricky, as it may lead to a trade-off between inflation and economic growth. Focusing on headline inflation could cause a deeper recession than looking at a measure of inflation that excludes external shocks.