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Bank of Israel Raises Interest Rate to 0.5% to Curb Inflation Above 5%

The Bank of Israel has announced an increase in interest rates to 0.5% in an attempt to curb inflation, which has risen above 5%. This is the eighth consecutive time the central bank has raised interest rates since April 2022, with this latest hike bringing the rate to its highest level since 2008.

Inflation in Israel rose to 5.4% in January, the highest it has been in 14 years, and above the government’s target of 1-3%. The central bank’s decision to raise interest rates is aimed at reducing spending and discouraging borrowing, which can contribute to rising prices.

The Bank of Israel has stated that any future interest rate increases will be dependent on economic and inflation data. The bank has also noted that the rate hike may cause some short-term economic slowdown, but believes that it is necessary to prevent long-term damage to the economy.

The increase in interest rates is expected to impact borrowers, including businesses and consumers, who may face higher borrowing costs as a result. However, the Bank of Israel hopes that this measure will help to bring inflation back down to within the government’s target range.

Overall, the central bank’s decision to raise interest rates highlights the ongoing efforts to address rising inflation and maintain economic stability in Israel.

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