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Bank of Israel says Feb money supply drops 1.1 pct

JERUSALEM: Israel's M1 money supply fell a preliminary 1.1 percent in February to 25.9 billion shekels, the Bank of Israel said on Sunday.

The central bank said M1 had risen in the 12 months through February by 21.6 percent. In January, M1 grew 1.2 percent, slowing from an 8.8 percent surge in December. The Bank of Israel changed its format for reporting on money supply developments, replacing information on credit growth with figures on consumer prices, inflation expectations and exchange rates.

"The aim of the new table is to present a variety of the main statistics -- although not the only ones -- that form the basis of the Bank of Israel's monthly monetary policy decisions," the central bank said in a statement.

According to the central bank, capital market expectations pegged inflation at 2.9 percent in the 12 months from February, with a 2.6 percent rise forecast for the following 12-month period. The Bank of Israel said the average inflation forecast -- culled from the estimates of three commercial banks and two economic consultancies -- one year out is 3.7 percent.

The government's inflation target for 2000 is 3-4 percent, and the money supply figure supports expectations of a 0.4 percentage point rate cut for April. -Reuters