Bank of Israel hikes interest rate to 0.75%, second increase in two months

The interest rate was raised from 0.1% to 0.35% last month in an attempt to stabilize Israel's economy.

 New Israeli Shekel banknotes are seen in this picture illustration taken November 9, 2021 (photo credit: REUTERS/NIR ELIAS)
New Israeli Shekel banknotes are seen in this picture illustration taken November 9, 2021
(photo credit: REUTERS/NIR ELIAS)

The Bank of Israel hiked the interest rate for the second time in two months, from 0.35% to 0.75%, on Monday.

The interest rate was raised from 0.1% to 0.35% last month in an attempt to stabilize Israel's economy.

Since the onset of the COVID-19 pandemic, Israel - like many countries around the world - has experienced an array of economic challenges, from trade logistics issues to increased dependence on government finance. 

The raise in Israel's interest rate is expected to ease the current demand for government loans as a means to push the nation’s economy in a manageable direction.

The Bank of Israel building is seen in Jerusalem June 16, 2020. (credit: REUTERS/RONEN ZEVULUN)The Bank of Israel building is seen in Jerusalem June 16, 2020. (credit: REUTERS/RONEN ZEVULUN)

The monetary policy committee, it said, decided that "conditions allow for the start of a gradual process of increasing the interest rate."

It added that the "pace of raising the interest rate will be determined in accordance with activity data and the development of inflation, in order to continue supporting the attainment of policy goals."

Zachy Hennessey contributed to this report.