Bank of Israel leaves benchmark interest rate unchanged at 2%

By Richard Connell

New York, Dec. 29 - The Bank of Israel left its benchmark interest rate unchanged at 2% at its meeting on Monday, according to a news release issued by the bank.

CPI inflation in Israel rose by 0.1% in November, within the forecast range, and over the last 12 months inflation stands at 2.3%, within the range of the price stability target.

Looking forward, the bank forecast inflation in 2011 at 2.6%, with the greatest risks deriving from developments from abroad and in the local housing market.

Recent economic data supported the assessment that economic activity increased at a rate similar to that of the third quarter, in line with forecasts of a 4% GDP growth in 2010.

The bank reiterated that keeping the interest rate at 2% was consistent with returning the interest rate to a more normal level while positioning inflation firmly within the target range.

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