Israel raises interest rates in eighth consecutive hike in 10 months
Fighting rising inflation, Bank of Israel Gov. Amir Yaron took the unpopular decision of increasing the interest rates to 4.25%.
TEL AVIV — The Monetary Committee of the Bank of Israel raised interest rates by 0.5% on Monday. The decision by Bank of Israel Gov. Amir Yaron marked the eighth consecutive hike since April 2022, bringing it to 4.25% — the highest level since 2008.
The rate hike reflects the bank’s deep concern over the risk posed by rising inflation — now at a 20-year high of 5.4% — to Israel’s economy.
Addressing the decision, Yaron explained that the 0.5% increase exceeded the central bank’s own 2023 forecast due to the unexpected 0.3% rise in the January consumer price index. “The CPI surprised us and everyone in the market. Equally important, core inflation seems to be sticking around and the decision takes into account the balance between the risk of inflation and of activity slowdown,” he told the financial newspaper Globes.
“Our main role and responsibility is to make sure that inflation does not increase and does not cause damage to the economy,” Yaron continued.
