Monday, May 23, 2011

Bank of Israel Lifts Interest Rate 25bps to 3.25%

The Bank of Israel increased its benchmark interest rate by 25 basis points to 3.25% from 3.00% previously.  The Bank noted: "The inflation environment is still above the upper limit of the target inflation range... Inflation expectations for the next 12 months derived from the capital market and the average of the forecasters' expectations are still slightly above the upper limit of the range this month. This, despite several background developments that could be expected to moderate inflation, such as the appreciation of the shekel in recent months and the fall in commodity prices.".  Israel recorded annual inflation of 4.0% in April this year, down from 4.3% in March, but above the Bank's inflation target range of 1-3%, meanwhile house prices increased 14% over the past 12 months.


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