Bank of Israel raises interest rate by 25 bps to 4.75%, highest since 2006

The Bank of Israel raised its benchmark interest rate by another quarter of a percentage point on Monday, in what may be the last move in a more than year-long battle against persistent inflation.

The Bank of Israel raised its benchmark interest rate by another quarter of a percentage point on Monday, in what may be the last move in a more than year-long battle against persistent inflation. The central bank lifted its key rate to 4.75% - its highest level since late 2006 - from 4.5%. It was the 10th straight time it has raised rates in an aggressive tightening cycle that has taken the rate from 0.1% last April.

Despite the rate hikes, Israel's inflation rate stood at 5% in April, near a 14-year high and well above the government's 1%-3% annual target range. At the same time, Israel's economy grew a faster than expected 2.5% annualised rate in the first quarter from the prior three months.

All 15 economists polled by Reuters had projected a 25 basis point move.