Israel cuts interest rates by 25 basis points

Israel cuts interest rates by 25 basis points

The Bank of Israel has announced a cut of 25 basis points in interest rates for November, which will stand at 3.5%.

The rate cut was largely expected, as concerns regarding inflation declined and new economic activity stalled.

Therefore the central bank decided that the balance of benefits and risks favoured a lower interest rate to try and promote economic activity, particularly as inflationary pressures appear to have begun to ease.

Tax revenues, demand and activity have all declined over the last few weeks, prompting the bank to try and bolster the situation through lower rates.

As with many other nations, the share indices in Israel have fallen substantially in recent weeks, down about 20%.

This decision follows an unscheduled cut of 50 basis points made on 7 October, with a view to returning inflation to the target range of 1-3% over the course of the next year.

The Bank of Israel forecasts a lessening of inflation in the medium term, and intends the lower interest rate to ease the cost of borrowing and promote economic growth.

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