Bank of Israel closes "interest rate gap"

The Bank of Israel has announced an interest rate increase of 25 basis points. The hike, which takes rates to 3.75%, was somewhat unexpected as most observers expected rates to remain unchanged.

The central bank said in its policy statement that the increase was "consistent with the policy of maintaining price stability, as expressed by the inflation target of 1-3% a year".

The central bank also noted that the consumer price index (CPI) rose by 0.7% in June, well above forecasts of 0.4%. Although

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