The Bank of Israel reduced the interest by 0.25% - to a historic bottom of 0.25%.
The reasons for the decision: inflation data, the dollar rising over the Shekel, and slow economic activity which began even before operation Protective Edge.
The decision to reduce the interest rate for September 2014 by 0.25 percentage points, to 0.25%, is consistent with the Bank of Israel's monetary policy which is intended to return the inflation rate to within the price stability target of 1–3 percent a year over the next twelve months, and to support growth while maintaining financial stability.
The path of the interest rate in the future depends on developments in the inflation environment, growth in Israel and in the global economy, the monetary policies of major central banks, and developments in the exchange rate of the shekel.
The Bank of Israel explained the decision that "first measurements of the month of July show an additional moderation following the operation. Some of it, mostly the part related with tourism, may last a relatively long time, whereas the moderation related with personal consummation is anticipated to be temporary.
The consummation may compensate for this moderation later on". The Bank noted that the improvement in the employment market has slowed down, and that the accommodation prices continue to rise – another factor considered when the decision was made.
