An Israeli flag flutters outside the Bank of Israel building in Jerusalem, Aug. 7, 2013. Photo: Reuters / Ronen Zvulun / File.

The Bank of Israel is expected to keep short-term interest rates unchanged for a fourth straight meeting while taking other steps to help an economy hammered by the coronavirus pandemic, though some analysts still bet on a small rate cut.

Of the 17 economists polled by Reuters, 11 believe the monetary policy committee (MPC) will keep its benchmark rate at an all-time low of 0.1 percent when the decision is announced on Thursday at 4 p.m. (1300 GMT).

Five others expect a reduction to 0.0 percent, while one anticipates a “symbolic” cut to 0.05 percent.

Should Israel cut rates to zero, it would join Hungary and the Czech Republic as having zero or negative rates among emerging markets.

The central bank will also update its economic estimates, with a likelihood of a downward revision to its forecasts.

It lowered the rate from 0.25 percent in April but has since focused on calming markets during the coronavirus crisis, buying foreign currency and ensuring cheap credit while introducing measures such as corporate bond purchases.

At the last meeting on Aug. 24, five of six Monetary Policy Council members voted for no move and one supported a 10 basis point reduction.

“A rate cut would suggest that the Bank of Israel thinks that credit is too expensive, which we do not think is the case,” said Citi economist Michel Nies, noting Israeli government bonds have a flat yield curve and corporate bond rates have fallen. Government bond yields through 2022 are no more than 0.1 percent, while the April 2021 yield was negative at -0.02 percent.

Most analysts expect policymakers to act in some fashion.

“I would be surprised if we don’t’ see something, and something significant,” said Leader Capital Markets chief economist Jonathan Katz.

He said in addition to a rate cut the central bank could pledge to keep rates low for at least a couple of years, like the US Federal Reserve has done, and double the corporate bond purchase program to 100 billion shekels ($30 billion).

Similar to the European Central Bank, the Bank of Israel could also provide long-term loans to commercial banks at negative interest rates on condition they would translate into credit to the private sector, Katz said.

Those expecting a rate cut say the economy needs stimulus in the wake of a second lockdown aimed at lowering COVID-19 infections. The central bank in its most pessimistic forecast sees a 7 percent economic contraction in 2020 and 3 percent growth next year — estimates expected to become a base scenario given a jobless rate above 12 percent.

“Things have changed a lot since last meeting. We are on the adverse (economic) scenario path, in a political and fiscal mess, deep negative inflation and a strong shekel,” IBI Investments chief economist Rafael Gozlan said.