The shekel is strengthening against the US dollar, but is flat against the euro in morning inter-bank trading today. In comparison with yesterday's representative rates, the shekel-dollar exchange rate is down 0.62% to NIS 3.604/$, but the shekel-euro exchange rate is up very slightly to NIS 5.236/€. The Bank of Israel will announce the interest rate for September at 5:30 pm today. The decision is highly important, given growing concern in international markets about a possible global economic slowdown, because of the budget crisis in the US and the widening sovereign debt crisis in Europe, which are liable to affect the Israeli economy. Analysts expect Governor of the Bank of Israel Prof. Stanley Fischer to keep the interest rate unchanged at 3.25%. 20 of 21 analysts polled by "Bloomberg" believe that Fischer will keep the interest rate unchanged; the exception is Union Bank, which expects him to cut the interest rate to 3%. "A 50-basis point cut in the interest rate would not surprise us," said Meitav Investment House Ltd. in its weekly macroeconomic report. It nevertheless believes that Fischer will keep the interest rate unchanged. Psagot Investment House Ltd. macroeconomic analyst Ori Greenfeld agrees that Fischer will not change the interest rate. Looking ahead, in view of growing international uncertainties and their effects on Israel, he says that predicting the interest rate 12 months forward is very hard to do. "We believe that the likeliest scenario is that the interest rate will be unchanged in 12 months, or raised by 25 basis points. Further deterioration of the problems increase the probability of an interest rate cut."

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