The Bank of Israel raised interest rates on the shekel by 50 basis points, bringing interest rates to 3.25 percent, the highest level in 9 years, at a time when the bank is looking to control consumer price inflation.
The bank said in a statement, Monday, that inflation in Israel exceeds the upper limit of the target range, recording 5.1 percent during the past 12 months ending last October.
Estimates indicated an increase in interest rates by 75 basis points, but the bank reduced the increase, which means that it may be heading for another increase, but less severe, at its next meeting.
According to the statement, “economic activity in Israel remains strong… the labor market is as well… and the level of GDP is still higher than the long-term trend.”
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He added, “However, it is expected that the tightening of monetary policy and the moderation of activity abroad will lead to some slowdown in economic activity in Israel as well, and there are a number of indicators that show signs of the beginning of such a process.”
