Bank of Israel keeps key rate at 4.5%

THE Bank of Israel held interest rates steady on Monday (Jul 8) for the fourth straight meeting, retaining a cautious policy stance due to Israel’s nine-month-old war with Hamas, sticky inflation, and a bounce back in economic activity.

The central bank, also worried about the country’s risk premium, which has risen since the war began, left its benchmark rate at 4.50 per cent. It had reduced the rate by 25 basis points in January after inflation eased and economic growth was hit by Israel’s war with Palestinian militant group Hamas, but kept policy steady in February, April and May.

All 15 analysts polled by Reuters had expected no rates move.

Israel’s annual inflation rate remained at 2.8 per cent in May, still within its target range of 1-3 per cent, after reaching 2.5 per cent in February.

The economy grew an annualised 14.4 per cent in the first quarter from the prior three months, after shrinking in the fourth quarter after the war broke out on Oct 7. REUTERS