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BANK OF Israel headquarters in Jerusalem

Bank of Israel Raises Interest Rate to 4.75%, Highest since 2006

The Bank of Israel on Monday, May 22, raised the interest rate from 0.25% to 4.75% in an effort to curb inflation. The tenth consecutive hike in just over a year brought the interest rate to its highest level since 2006.

Various components of the Consumer Price Index have experienced significant inflationary pressures, indicating a need for urgent action. Last month, the central bank raised the interest rate of 0.25% to 4.50%.

“Economic activity in Israel is at a high level and is accompanied by a tight labor market, although there is some moderation in a number of indicators. Inflation is broad and remains high,” the Bank of Israel said in a statement.

It also said that inflation in Israel over the last year, at 5%, was well over its 1%-3% target range, although the rate of growth is lower than last year.

“GDP grew by 2.5% in annual terms in the first quarter, a relatively high pace once the temporary effects of changes in vehicle taxation are omitted. The labor market remains tight and in a full-employment environment, but the job vacancy rate is in a downward trend,” the Bank of Israel said.

While the central bank’s rate hikes are intended to stabilize the economy, they also affect thousands of mortgage holders. (JPost / VFI News)

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