The Bank of Israel says it has lowered interest rates by a half percentage point for the second time this month in the context of the world economic meltdown.
In a statement Monday, the bank said it reduced its rate to 2.5 percent "to strengthen the economy's ability to cope with the implications of the global financial crisis."
The bank said the reduction would help cut credit costs and counter inflation pressures.
Israel's banking industry has not suffered the same problems faced by its larger counterparts in the US and Europe, but the government officials are concerned a recession will reach Israel.
Last month the bank cut rates by a quarter of a percentage point.