Quotes from Commerzbank Corporates & Markets:
-ILS: The rate easing cycle in Israel was been de facto closed when rates reached 0.25%. But, we call for a 10bps further rate cut at today's meeting as the shekel has broken out stronger from its recent range, probably driven by safe haven flows on renewed Grexit, Russia/Ukraine and Fed concerns.
-Meanwhile, Israel is in deflation, which is not all commodity price driven - underlying deflation began in Q2 2014 - and BoI views a strong shekel as a major threat to the economy and to the inflation target.
-The CB can still lower rates slightly before reaching technical zero, and this would be the quickest way to respond in order to halt FX appreciation, before the trend picks up too much momentum.
