The Bank of Israel decided Monday to leave Israel 'skey interest rate at 2.5% for March, following the decision to decrease it by 0.25% on January.
The decision, made by the Bank's Monetary Committee, was made despite the fact that recent inflation data supports another decrease in interest rates.
The Central Bureau of Statistics said that Israel's real inflation rate, which is calculated according to year-on-year index rates, currently stands at 2%, making it the lowest annual inflation rate in Israel in the past five years.
The Bank said that the decision stemmed from the relative calm in Europe's debt crisis, as the Central Bank wants to "reserve its ammunition" in case the crisis finds its way to Israel and requires a more vigorous interest cut to support the market.
The Bank of Israel predicts that Israel's annual inflation rate in 2012 will eventually reach 2.3%, midway to the government's annual inflation goal of 1%-3%.