Bank of Israel raises key rate by 3/4 point to 2.75% to quiet inflation

The Bank of Israel on Monday raised its benchmark interest rate ILINR=ECI by three-quarters of a point, the fifth straight meeting it has increased rates, to try to squash inflation that remains well above its target.

The central bank lifted its key rate to 2.75% from 2.0%. In April, policymakers had begun raising the rate from 0.1% -- an all-time low where it had stayed for the prior 15 decisions since a 0.15 point reduction at the outset of the COVID-19 pandemic.

Israel's annual inflation rate stood at 4.6% in August after reaching a 14-year high of 5.2% in July, topping the government's 1%-3% annual target range and creating public anger at spiking living costs ahead of a Nov. 1 election.

At the same time, Israel's economy grew an annualized 6.8% in the second quarter from the first quarter.