Israeli inflation will slow to 1.6 percent in the next 12 months, the lowest forecast in more than a year, according to a Bank of Israel survey of economists. That's down from the 2.7% forecast in the previous survey, released October 16, and the lowest since September 2007, the Jerusalem-based central bank said Sunday in a statement. Consumer prices rose 0.1% in October, the Central Bureau of Statistics said. While growth exceeded the target of 1% to 3% for the 11th month in a row, it was unchanged from September, suggesting that consumer prices have peaked and giving the central bank more leeway in reducing interest rates to help the slowing economy. "In this kind of environment, you're going to see prices go down," said Dan Aks, an economist at Prisma Investment House Ltd. in Ramat Gan. "We may even get into a deflationary environment," said Aks, citing the "severe deterioration of the economy" and lower commodity prices as contributing to the lower inflation. Israel's M1 money supply, which includes consumer and corporate cash and checking accounts, rose 4% in October, bringing the increase over the past year to 18.6%, the highest since November 2007, the central bank also said. Bank of Israel Governor Stanley Fischer lowered the benchmark interest rate by half a percentage point to a record 3% in an unscheduled move on November 11, citing concern that the global economic slowdown was "significantly deeper" than previously estimated. The next scheduled interest rate is decision is on November 24. "The central bank is signaling that it may continue to reduce the interest rate, possibly by half a percentage point at the end of this month," Tel Aviv-based Leader & Co. said Sunday in an e-mailed note to clients.