Bank of Israel maintains benchmark interest rate at 0.1% amid rising inflation


FILE PHOTO: An Israeli flag flies in front of the Bank of Israel building in Jerusalem on August 7, 2013. REUTERS / Ronen Zvulun / File Photo

JERUSALEM (Reuters) – The Bank of Israel left its benchmark interest rate at 0.1% for a 12th consecutive policy meeting on Thursday amid a rebound in the economy after a series of COVID lockdowns and beyond that inflation has peaked in eight years.

The 15 economists polled by Reuters had said they expected the monetary policy committee to keep rates stable after cutting it by 0.25% at the start of the COVID-19 pandemic.

Israel’s inflation rate hit 2.2% in August – above the midpoint of the government’s annual target range of 1-3%. Policymakers said it was difficult to determine whether the rebound in inflation, which turned positive in March, is transitory.

At the same time, a rapid rollout of the COVID-19 vaccination in which 40% of Israelis received a third booster has resulted in an economic rebound, with the country largely free from restrictions related to the virus. The economy grew 16.6% annualized in the second quarter.

The next rate move is expected to be a rate hike in 2022 or 2023.

Reporting by Steven Scheer; Editing by Toby Chopra

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