Bank of Israel cuts interest rate by 25 bps to ½%

By Richard Connell

New York, March 23 - The Bank of Israel cut its benchmark interest rate by 25 basis points to ½% at its meeting on Monday, according to a news release issued by the bank.

The bank noted a contraction in the Israeli economy, reflected in lower exports and private consumption, and reduced its growth forecast for 2009 to negative 1½%.

The bank also pointed out that inflation continued its downward trend in February, and forecast that 12-month expectations are below the lower limit of the inflation target range.

Noting that many major countries including the United States, England and Japan have reduced interest rates to almost zero, Israel reduced its rate in order to strengthen its economy's ability to cope with the global economic crisis.

Israel has now cut its rate by 400 basis points since September.

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