JERUSALEM, Nov. 24 (Xinhua) -- Israel's central bank announced on Monday the decision to reduce its benchmark interest rate by 0.25 percentage points to 4.25 percent, according to a statement issued by the bank.
This is the first time in almost two years that the Bank of Israel has changed the interest rate. The previous adjustment was on Jan. 1, 2024, when the interest rate was lowered from 4.75 to 4.5 percent.
The rate cut was made possible by a recent decline in the annual inflation rate, which has returned to the government's target range of 1 to 3 percent.
"Annual inflation has moderated and stood at 2.5 percent in the past two readings," the bank's statement said. "Forecasters project that there will be some increase in inflation at the end of the year, and that it will then decline and stabilize around the midpoint of the target range."
The bank noted several risks that could accelerate inflation, including geopolitical developments and their impact on economic activity, a rise in demand alongside supply constraints, and fiscal developments.
Israeli Finance Minister Bezalel Smotrich said the interest rate cut joins a series of steps and clear signs that Israel is on the path to "tremendous economic growth."
Ron Tomer, president of the Manufacturers Association of Israel, said in a statement that the move will help Israeli exporters by curbing the sharp rise in the value of the Israeli currency against major currencies.
He added that the interest rate cut would lower financing costs and allow renewed investment in capital, technology, and automation, a critical step in rebuilding Israeli industry after a challenging year. ■
