For the sixth time in a row: The Bank of Israel raised the interest rate by 0.5% to 3.25%

November 21, 2022   

Bank of Israel Governor Prof. Amir Yaron announced on Monday afternoon that he would raise interest rates for the sixth time in a row since the beginning of the year - by 0.51% per annum. The interest rate now stands at 3.251%. The significance of the move: mortgage and loan repayments for hundreds of thousands of Israelis will increase again. Fuel prices have also risen since the temporary reduction in taxation has ended, electricity prices will rise at the beginning of January, and water rates will also become more expensive. This means that inflation is not stopping - which is making it difficult for the Bank of Israel and is causing the interest rate to rise. Until seven months ago, the Bank of Israel's interest rate was only one-tenth of a percent. In an attempt to combat rising inflation and stop price increases, it was raised, despite the Bank of Israel's intention to begin moderating the increases. The chairman of the business sector presidency, Dubi Amitai, called on the governor of the Bank of Israel to publish an economic plan for the government, without which, he said, "the use of the tool of raising interest rates, at such a high rate, will be destructive, with an unnecessary price that will be levied on businesses and the entire public." The president of the Association of Chambers of Commerce, Uriel Lin, also attacked Prof. Yaron's decision, calling it a "mistake." "This is certainly a serious mistake at a time when the first signs of a slowdown in the economy and a rise in the unemployment rate are emerging, which require different and more comprehensive thinking to curb inflation. Interest rate increases themselves accelerate inflation, as they increase the costs of the business sector as a whole." He also calls for the publication of a comprehensive plan and the initiation of a series of significant steps, such as the continued reduction of tariffs on food imports and additional momentum in reducing import barriers, which will increase competition.