Israel’s central bank raised interest rates by 50 basis points today, the most in more than a decade, while taking a tighter tone on its next moves as it steps up efforts to rein in runaway inflation.
In particular, the central bank raised its key interest rate to 1.25% from 0.75%, confirming analysts’ forecasts in a Bloomberg poll. This was the third consecutive rate hike and the largest since 2011.
“The Israeli economy is recording strong growth accompanied by tight labor market conditions and strengthening inflation,” the bank’s Monetary Policy Committee said in a statement. The Commission removed from its announcement the forecast for a “gradual” process in the rate hike cycle, adopting a more aggressive tone for its next moves.
The Bank of Israel’s decision to step up to counter the rally in inflation follows similar moves by other central banks in what could be the most aggressive global monetary tightening since the 1980s, Bloomberg notes. The American Federal Reserve last month held the its biggest rate hike since 1994which forced other central banks to rush to follow suit.
Source: Capital
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