The Bank of Israel cut interest rates on Monday for the first time in five months, in order to protect the domestic economy from Eurozone's economic woes.
by Ondrej Lehocky
Jerusalem - The Bank of Israel lowered its benchmark rate to 2.25% from 2.50%, citing a lack of inflation pressures and continued moderate growth.
"This month macroeconomic data around the world indicate a further slowdown in growth, and projections of international organizations were revised downward. The level of economic risk in the world due to developments in Europe remained high, and with it the concern of negative effects on the domestic economy," the central bank said in a statement.
The bank also noted that the US Federal Reserve had eased its policy and there are expectations other central banks will take additional steps.
The step was widely expected, amid signs of an economic slowdown due to the elevated debt crisis in the Eurozone.
According to the newest estimates, the country's economic growth should reach 3.1% in 2012, followed by a growth of 3.4% in 2013. Next year's growth has been revised down from 3.5%.
Inflation reached an annual rate of 1.6% in May, the lowest since September 2007.
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