The Bank of Israel Monetary Committee, led by Governor Amir Yaron, on Monday raised the benchmark interest rate by 0.5%, to 3.25%.

“The Israeli economy is recording strong economic activity, accompanied by a tight labor market and an increase in the inflation environment,” the central bank said in a statement.

“The committee has therefore decided to continue the process of increasing the interest rate. The pace of raising the interest rate will be determined in accordance with activity data and the development of inflation, in order to continue supporting the attainment of the policy goals,” it continued.

The Bank of Israel has hiked interest rates six times since April, increasing the benchmark from 0.1% to 0.35%.

Following two consecutive aggressive 0.75% hikes, last month and in late August, the Bank of Israel Monetary Committee chose a more moderate 0.5% increase this week. Some experts had expected another 0.75% boost.

The bank is attempting to combat inflation, which has been running at more than 5% in Israel for the last year. Inflation for the 12 months through October 31 increased to 5.1% from 4.6% in the 12 months ending on August 31.


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