The Bank of Israel on Monday announced that it would raise the interest rate by 0.5 percent, to 1.25%, as part of its efforts to curb rising inflation.
The bank said its Monetary Committee made the decision after inflation in Israel crossed “the upper bound of the target range,” at 4.1 percent over the past 12 months.
“With that, it remains significantly lower than in most advanced economies,” the bank qualified in its statement.
Looking ahead, the bank said that it expected inflation to return to “within the target” range in 2024, and then the following year it would have “converged back to the midpoint of the range.”
The statement noted that while economic activity in the country remains at a “high level,” a downturn is possible in view of the effects of the war in Ukraine and the slowdown in manufacturing in China, as well as the political uncertainty in Israel.
