Monetary policy is the "dominant factor" affecting short-term yields on Israeli government bonds, according to new research published by the Bank of Israel, while it also has a "statistically significant, if small, effect" on long-term yields.

The research paper, by Adi Brender and Sigal Ribon, both of the Bank of Israel's research department, finds the drop in the central bank's key interest rate in the middle of the last decade – from 9% to under 4% – was a "notable part" of the subsequent