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NEWS
Interest Rates Down Another 0.2%
by Yated Ne'eman Staff
Bank of Israel governor David Klein announced on Monday that he
will reduce the interest rate by 0.2 percent leaving the rate
for January 8.0 percent a year. In the past six months, Klein
has lowered interest rates six times, by a total 1.3 percent.
According to the central bank governor, price stability will
allow Israel to integrate into the global economy.
The interest rate differential between the United States and
Israel has contracted from 9 percent two years ago to 1.5
percentage points today, according to the Bank of Israel.
Inflation this year was lower than the central bank's target of
3-4 percent, and was virtually nonexistent. For the coming
years, the government decided that interest policy have an
inflation target of 2.5 to 3.5 percent for 2001, 2 to 3 percent
for 2002, and 1 to 3 percent -- considered price stability --
from 2003 onward.
The bank noted that the relative stability which has
characterized Israel's financial markets must now be seen in
the light of greater economic uncertainty in the domestic
situation and possible geopolitical changes. In addition the
U.S. capital markets have demonstrated recently greater
volatility.
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