Bank of Israel Makes Strongest Rate Hike in 20 Years to Cool Inflation

The Bank of Israel raised its benchmark interest rate on Monday by three-quarters of a percentage point, its biggest hike in two decades, and appeared on track for further increases as it tries to rein in inflation that has topped 5%, Reuters reported. The central bank lifted its key rate to 2.0% from 1.25%, continuing a tightening cycle that began in April when policymakers first raised the rate from 0.1%, an all-time low set at the outset of the COVID-19 pandemic. The likelihood of a 75-basis-point hike increased last week when data showed Israel's economy grew a robust 6.8% in the second quarter, while the annual inflation rate jumped to 5.2% in July, its highest level since October 2008. The central bank's policymakers say they are determined to get inflation back within the government's 1-3% annual target. The last time the Bank of Israel moved by three-quarters of a point was a rate reduction in early 2009. It last hiked rates by at least that amount in mid-2002. Read more.