The Bank of Israel's Monetary Committee decided on Monday to keep the base interest rate unchanged at 0.25 percent.
This is the first interest rate decision by Amir Yaron, the new governor of the Bank of Israel, who took office on December 24, 2018.
The committee raised Israel's base interest rate on Nov. 26, 2018 for the first time in more than 7 years from 0.1 to 0.25 percent.
Yaron said that in the next two years, there will be a gradual and cautious increase in the base interest rate.
The central bank's research department estimates that the interest rate will rise to 0.5 percent in the third quarter of 2019 and to gradually increase to 1.25 percent by the end of 2020.
The interest rate raise is carried out moderately to enable it to stabilize within the government's inflation target range between 1 and 3 percent.
This is done without strengthening Israel's local currency new shekel against the U.S. dollar, which could weaken inflation and make it difficult for Israeli exporters.
Inflation in 2019 is expected to be 1.3 percent within the government's target range.
The central bank also revised Israel's growth forecast for 2019 down from 3.6 to 3.4 percent.
It appears that the disappointing initial growth figure for 2018, according to which the Israeli economy grew by only 3.2 percent in the past year, caused the Bank of Israel to reexamine its forecasts.
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