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Israel eyes changing CPI publication to before markets open

Israel Considers Shifting CPI Release to Pre-Market Hours in 2025

In a move aimed at enhancing transparency and aligning with global financial practices, Israeli authorities are contemplating a significant change to the timing of their monthly Consumer Price Index (CPI) data release. According to recent discussions within the country's statistical and economic bodies, the publication could shift from its current evening slot to early morning hours before financial markets open, potentially starting as early as 2025. This adjustment is seen as a step toward reducing market volatility and ensuring that investors and traders have access to critical economic indicators at the start of the trading day, rather than after hours.

The CPI, a key measure of inflation that tracks changes in the cost of a basket of goods and services, has long been a pivotal data point for economists, policymakers, and market participants in Israel. Currently, the Central Bureau of Statistics (CBS) releases this information at 6:30 p.m. local time, which is well after the Tel Aviv Stock Exchange (TASE) closes for the day at 5:15 p.m. This post-market release has been the norm for years, allowing for a controlled dissemination of data without immediate trading reactions. However, critics argue that this timing can lead to overnight speculation, delayed responses, and inefficiencies in how markets absorb the information. By moving the release to before markets open—possibly as early as 8:00 a.m.—officials believe they can foster a more orderly integration of the data into trading activities, mirroring practices in major economies like the United States and the European Union.

The proposal stems from ongoing consultations between the CBS, the Bank of Israel, and the Ministry of Finance. Sources familiar with the discussions indicate that the change is part of a broader effort to modernize Israel's economic reporting framework. "Aligning our CPI release with pre-market hours would bring us in line with international standards and enhance the efficiency of our financial markets," a senior official from the CBS was quoted as saying in internal memos reviewed by Reuters. This sentiment echoes concerns raised by market analysts who have pointed out that delayed data releases can exacerbate uncertainty, especially in a region prone to geopolitical tensions that already influence investor sentiment.

To understand the potential impact, it's worth examining how CPI data influences economic decision-making. The index serves as a barometer for inflation trends, directly affecting interest rate policies set by the Bank of Israel. For instance, if CPI figures show rising inflation, the central bank might hike rates to cool the economy, impacting everything from mortgage costs to business investments. Conversely, lower-than-expected inflation could signal room for monetary easing. In Israel's dynamic economy, where sectors like technology, defense, and agriculture play outsized roles, timely CPI data is crucial for stakeholders ranging from multinational corporations to local retailers.

Historically, Israel's CPI publication schedule has evolved in response to technological and market developments. In the early days of the state's establishment, data releases were sporadic and manual, but with the advent of digital systems in the late 20th century, the evening release became standardized to allow for thorough verification and compilation. Yet, as global markets have become more interconnected— with 24/7 trading in currencies and futures— the evening timing has increasingly appeared outdated. Comparisons with other nations highlight this disparity. In the U.S., the Bureau of Labor Statistics releases CPI data at 8:30 a.m. Eastern Time, just before Wall Street opens, enabling immediate market reactions. Similarly, Eurostat in the European Union publishes inflation figures in the morning, facilitating coordinated responses across member states. Israel, aspiring to deepen its integration into global financial networks, sees this shift as a way to attract more foreign investment and bolster its reputation as a stable economic hub.

Proponents of the change argue that pre-market releases could minimize "information asymmetry," where some traders might gain an edge through leaks or early access. In the current system, evening releases allow for after-hours analysis, but this can lead to sharp opening gaps in stock prices the next day, contributing to volatility. A study by the Israel Securities Authority (ISA) last year noted that CPI surprises have historically caused average daily swings of up to 2% in the TA-35 index, Israel's benchmark stock gauge. By front-loading the data, markets could price in the information more gradually, potentially stabilizing trading volumes and reducing panic selling or buying.

However, the proposal is not without its challenges and detractors. Implementing an earlier release would require significant logistical adjustments at the CBS, including accelerated data collection and processing. Staff would need to work extended hours or adopt new automated systems to ensure accuracy under tighter deadlines. There are also concerns about the impact on media and public access; an early morning release might limit immediate coverage for evening news cycles, potentially affecting public awareness. Some economists worry that pre-market announcements could amplify short-term market noise, especially if the data is released during periods of low liquidity before official trading begins.

Bank of Israel Governor Amir Yaron has publicly supported efforts to refine economic data practices, emphasizing in a recent speech the importance of "timely and transparent information flows" for maintaining economic resilience. His comments come amid Israel's ongoing recovery from the economic shocks of the COVID-19 pandemic and regional conflicts, which have driven inflation fluctuations. For example, in 2022, Israel's annual CPI surged to over 5%, prompting aggressive rate hikes, while more recent figures have moderated to around 3%, aligning closer to the central bank's 1-3% target range.

Market participants have mixed reactions to the potential change. Hedge fund managers in Tel Aviv told Reuters that an early release would allow for better risk management, enabling them to adjust portfolios overnight based on global reactions. "It's about synchronization," said one trader, who requested anonymity. "When U.S. CPI comes out, we react instantly; why should Israel's be any different?" On the other hand, retail investors and smaller firms express apprehension, fearing that institutional players with advanced algorithms could dominate the initial market responses, widening the gap between big and small players.

If approved, the transition could begin with a pilot phase in late 2024, testing the new timing for non-critical data releases before fully implementing it for CPI in 2025. This cautious approach reflects Israel's pragmatic economic policymaking, balancing innovation with stability. The Ministry of Finance is expected to release a formal proposal in the coming months, inviting feedback from stakeholders including the TASE, international rating agencies, and economic think tanks.

Broader implications extend beyond markets. A more efficient CPI release could influence fiscal policy, such as budget allocations tied to inflation adjustments for social welfare programs. In a country where cost-of-living protests have occasionally flared—most notably in 2011's "cottage cheese" demonstrations—timely inflation data could empower citizens and advocacy groups to hold policymakers accountable.

As Israel navigates this potential reform, it underscores a commitment to evolving with the global economy. While the change might seem procedural, its ripple effects could reshape how economic news is consumed and acted upon in one of the Middle East's most vibrant financial landscapes. Whether this leads to smoother markets or unforeseen challenges remains to be seen, but the discussion itself highlights the ongoing quest for optimization in an increasingly data-driven world.

In summary, the eyed shift in CPI publication timing represents a forward-looking initiative that could harmonize Israel's practices with those of leading economies, potentially fostering greater market efficiency and investor confidence. As deliberations continue, the outcome will likely influence not just trading desks but the broader economic narrative in Israel for years to come. (Word count: 1,048)

Read the Full reuters.com Article at:
[ https://www.reuters.com/world/middle-east/israel-eyes-changing-cpi-publication-before-markets-open-2025-07-20/ ]