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Fischer drops interest rate to 1.75%
In light of global financial crisis and in bid to support exports, fight growth deceleration, Bank of Israel governor cuts interest rate by 0.75% to its lowest level ever
Gil Kol
Fighting growth deceleration: Bank of Israel Governor Stanley Fischer on Monday cut the interest rate from 0.75% to 1.75% - a new historic low.
This time the governor waited for the regular announcement date, the last Monday of each month, despite a dramatic drop in the American interest rate earlier this month.
Thus, Fischer surprised most analysts, who had estimated that as he did in previous occasions, the governor would respond with an immediate interest rate drop.
November's consumer price index, which was negative, also supported an interest rate drop this month.
Most economists had estimated that the interest rate would be cut by 0.5% to 1%. Analysts who anticipated a drop of less than 1% assumed that Fischer would try and preserve ammunition for the dire times the economy is expected to face, in order to have more to play with in his interest rate decisions in the coming year, which is expected to be tougher than the one which is about to end.
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