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Bank of Israel hikes benchmark interest rate 1/2-point in inflation battle

  • The Bank of Israel on Monday raised its benchmark interest rate by a half percentage point in a bid to battle rising inflation.

  • The central bank lifted its key rate to 1.25% from 0.75%, its third straight rate increase since April.

  • Israel’s annual inflation rate reached a fresh 11-year high of 4.1% in May, well above the government’s 1%-3% annual target range.


The Bank of Israel lifted its key rate to 1.25% from 0.75% in July in a bid to battle rising inflation.

Eddie Gerald | Moment | Getty Images


The Bank of Israel on Monday raised its benchmark interest rate by a half percentage point, its most aggressive move in more than a decade in a bid to battle rising inflation that has topped 4%.

The central bank lifted its key rate to 1.25% from 0.75%, its third straight rate increase that follows similar moves from the U.S. Federal Reserve and others. In April, policymakers had kicked off the tightening cycle — raising the rate from 0.1%, an all-time low where it had stayed for the prior 15 decisions since a 0.15-point reduction at the outset of the COVID-19 pandemic.


All 15 economists polled by Reuters had said they expected the monetary policy committee to raise rates, 14 of them predicting a 0.5-point increase while one other projected a 0.25-point rise.

Israel’s annual inflation rate reached a fresh 11-year high of 4.1% in May, well above the government’s 1%-3% annual target range, while the jobless rate has dipped to 3.0%, raising concerns of further wage pressures.

The half-point hike was the strongest policy move since a similar increase in March 2011. Analysts expect more increases in subsequent decisions this year.[CNBC]

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