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This document presents the forecast of macroeconomic developments compiled by the Bank of Israel Research Department in March 2013. The forecast was presented to the Monetary Committee on March 21, 2013 during its meeting prior to the decision on the Bank of Israel interest rate for April and May 2013. According to the staff forecast, the inflation rate over the next year (ending in the first quarter of 2014) will be 1.7 percent. The Bank of Israel interest rate, which was 1.75 percent when the forecast was compiled, is expected to remain at that level during the coming year. Gross domestic product (GDP) is projected to grow by 3.8 percent in 2013 and by 4.0 percent in 2014.