Israel's national bank increased its key interest rates by 50 basis points on Monday to the expected 3.25% amid continued efforts to curb soaring inflation that remained well above the bank's target range at above 5%. This has been the Bank of Israel's sixth rate hike in a row, with inflation rising to 5.1% last month.
However, the central bank asserted that the economic activity "remained strong" and that the third-quarter growth remained above trend at 2.1% versus the previous trimester. While the bank's Monetary Committee confirmed rate hikes would continue in the coming months, it noted the pace of the raises might slow down. The next rate decision is scheduled for January 2.
Commenting on the international economic challenges, the bank warned of increasing recession risks across Europe due to the war in Ukraine, the energy crisis, and soaring inflation, as well as activity slowdown in China, where strict COVID-19 lockdowns are impairing industrial production.
