Bank of Israel lifts key interest rate for 7th straight time to 3.75%, highest since 2008

Sharon Wrobel is a tech reporter for The Times of Israel

Bank of Israel Governor Amir Yaron speaks at a conference in Tel Aviv, on November 29, 2022. (Avshalom Sassoni/Flash90)
Bank of Israel Governor Amir Yaron speaks at a conference in Tel Aviv, on November 29, 2022. (Avshalom Sassoni/Flash90)

The Bank of Israel increases the benchmark interest rate for the seventh straight meeting, raising its key lending rate by half a percentage point to 3.75%, the highest level since 2008, as the central bank steps up efforts to tame rising inflation in recent months.

The Bank of Israel’s monetary committee decides to lift the benchmark rate to 3.75% from 3.25%, in line with most economists’ forecasts. Since policymakers started to raise borrowing costs in April from an all-time low of 0.1%, the key lending rate has increased by more than 3.5 percentage points in eight months as the Bank of Israel seeks to bring inflation back into the government’s 1% to 3% target range. Meanwhile, inflation has accelerated to 5.3% as of November over the preceding 12 months, led by spiraling housing and food costs.

The Bank of Israel cites strong economic activity, a tight labor market and the rising inflation environment as the main reasons for lifting the key lending rate. In its statement, the central bank notes that housing prices have increased at a significantly higher rate in the past 12 months. Meanwhile, the number of construction starts and permits remains higher than in the past, and the number of home purchase transactions and the volume of mortgages taken out continues to decline, the Bank of Israel says.

Most Popular
If you’d like to comment, join
The Times of Israel Community.
Join The Times of Israel Community
Commenting is available for paying members of The Times of Israel Community only. Please join our Community to comment and enjoy other Community benefits.
Please use the following structure: example@domain.com
Confirm Mail
Thank you! Now check your email
You are now a member of The Times of Israel Community! We sent you an email with a login link to . Once you're set up, you can start enjoying Community benefits and commenting.