Governor of the Bank of Israel Prof. Stanley Fischer today cut the interest rate by another 25 basis points to 0.5%, the lowest level in Israeli history.
The Bank of Israel said the cut was intended to help the Israeli economy deal with the consequences of the global financial crisis.
The Bank said that there have been recent statistics have shown the recession is worsening, and the Bank of Israel recently lowered its growth forecast for 2009 to negative 1.5%. The Bank also said inflation continued to fall, and that 12-month forecasts remained below the bottom level of the target range for the CPI.
At the same time, Fisher did not announce any other monetary policy moves to ease credit conditions.
For the past two decades at least, the Bank of Israel's monetary council generated headlines about the height of the interest rate. Fischer arrived at the first session of this month's meeting yesterday facing a situation similar to the one faced by Federal Reserve Board Chairman Ben S. Bernanke last Wednesday. He cannot lower the interest rate much more, nor can he raise it. He was expected to do something bigger and more drastic, because of the worsening crisis, falling output, and rising unemployment.
Published by Globes [online], Israel business news - www.globes-online.com - on March 23, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009