Israel raises interest rates

Israel’s central bank raised interest rates today in response to inflation in the country. 

The Bank of Israel raised its rate by 0.75% to 2%. The financial institution said it is bullish on the economy’s overall growth, noting that gross domestic product grew 6.8% in the second quarter of 2022. However, the bank said that inflation was 5.2% over the past 12 months, which prompted the decision to hike rates, according to a press release. 

Israel’s target range for inflation is 1-3%. 

Why it matters: Inflation is increasing across the Middle East, in part due to global supply chain disruptions resulting from the Russian invasion of Ukraine.

This is not the first time the Bank of Israel has raised interest rates in an effort to curb inflation. The bank raised rates by 0.5% in June and by 0.4% in May. The latter was the biggest hike since 2011 at the time. Today’s increase was the largest in 20 years, according to Israeli press reports. 

Know more: Other central banks in the region have also raised interest rates this year. Several Gulf states did so last month, for example. However, last week, Egypt decided not to raise its rates, while Turkey opted to defy economic consensus and cut them.