Interest rate expected to rise by end of May

Israeli banking officials expected the key interest rate to rise by the end of May, following the US Federal Reserve's decision to raise the key interest rate to the highest level in more than five years, Army Radio reported. The Fed boosted its target for the federal funds rate to five percent. The funds rate, the interest that banks charge each other, stood at a 46-year low of one percent when the central bank began raising rates in June 2004 to keep inflation under control. In its statement announcing the decision, US central bank policy-makers indicated they may take at least a brief pause in hiking rates. It said the "extent and timing" of further rate increases would depend on future economic data.