Israel Central Bank Holds Benchmark Rate at 3.25%

The Bank of Israel maintained its benchmark interest rate steady at 3.25%.  The Bank noted: "The decision to leave the interest rate for September at 3.25 percent is consistent with the process of returning the inflation rate to within the target price-stability range of 1–3 percent a year within the next twelve months, and with supporting economic growth while maintaining financial stability.  The future direction of changes in the interest rate will be dependent on the inflation environment, economic growth in Israel and abroad, the monetary policy of the leading central banks, and developments in the exchange rates of the shekel."

Previously the Bank also held its monetary policy interest rate unchanged at its June and July meetings, after increasing the interest rate by 25 basis points to 3.25% at its May meeting this year.  Israel recorded annual inflation of 3.4% in July, compared to 4.2% in June, 4.1% in May, and 4.0% in April and just above the Bank's inflation target range of 1-3%.  Israel reported GDP growth of 4.8% (annualised) in the March quarter, and 3.3% in the June quarter, the Bank said that: 'The rate of growth in the second quarter was slower than in the first, mainly due to the slackening of global demand and its effect on exports, whereas domestic demand continued to increase."

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