* Rate decision due at 1300 GMT on Monday
* Shekel at 3.31 per dollar, strongest since mid-2008
* Central bank prefers bond buying, low rate loans to banks
* Israel economy grew nearly 40% annualised in Q3
JERUSALEM, Nov 29 (Reuters) - The Bank of Israel is expected
to keep short-term interest rates unchanged for a fifth meeting
after signalling it was unwilling to lower rates to zero or make
them negative and opting for other steps to support a recovery
from the coronavirus crisis.
Of 16 economists polled by Reuters, 15 believe the monetary
policy committee (MPC) will keep the benchmark rate
at an all-time low of 0.1% when the decision is announced on
Monday at 4 p.m. (1300 GMT) -- its last meeting of 2020.
One foresees a reduction to zero due to an inflation rate of
-0.8% and a 12-1/2 year peak in the shekel versus the
"They are totally done" cutting rates, said Leader Capital
Markets Chief Economist Jonathan Katz, echoing the sentiments of
most other analysts.
At its prior meeting on Oct. 22, five of the six
policymakers voted to hold the key rate.
Deputy Governor Andrew Abir told Reuters said afterwards
there was little reason to push its key rate to zero or below
given low borrowing costs for consumers and businesses.
He said the central bank could hold off from further action
if the economy started to recover from the coronavirus pandemic,
no more lockdowns were needed and access to credit grew.
Since the pandemic began, the central bank has lowered its
key rate once -- from 0.25% in April -- and has relied on other
measures, such as buying government and corporate bonds and
offering cut rate loans to banks to encourage lending to small
In addition to the rates decision, the Bank of Israel will
update some macro estimates. It currently forecasts an economic
contraction of 5% to 6.5% in 2020, depending on whether the
virus is contained and further lockdowns are needed.
It foresees growth of 1% to 6.5% in 2021.
The economy grew an annualised 37.9% in the third quarter,
according to preliminary data, after a 29.8% contraction in the
previous three months.
One issue for the central bank is the shekel, which stands
at 3.31 per dollar -- its strongest level since mid-2008.
"The Bank of Israel will continue to concentrate on foreign
exchange purchases to deal with the strong currency, as a
further rate cut is unlikely to help weaken the (shekel) by
much," said Barclays economist Michael Kafe.
($1 = 3.3164 shekels)
(Reporting by Steven Scheer; Editing by Edmund Blair)