Bank of Israel leaves benchmark interest rate unchanged at 1¼%

By Richard Connell

New York, Feb. 22 - The Bank of Israel left its benchmark interest rate unchanged at 1¼% at its meeting on Monday, according to a press release issued by the bank.

The bank noted that the consumer price index declined by 0.7% in January, in contrast to predictions of a decline of between 0.3% and 0.5%, due primarily to government decisions, including tax reductions and cancellation of the water surcharge.

Looking forward, the council forecast that inflation in Israel will stand at 1.7% in 2010, within the target range.

The council pointed out that the positive trend in domestic economic activity continued, as the GDP in fourth-quarter 2009 grew by 4.4%, led by increases in private consumption and exports of goods and services.

The council stated that the decision to keep the interest rate at 1¼% is intended to return inflation to within the target range and further economic activity while starting a process of returning the interest rate to a more "normal" level.

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