The Bank of Israel's Monetary Committee surprised capital market analysts on Monday, when it decided to cut the interest rate for the month of November by 0.25% to 2%.
In the past year, the central bank lowered its key rate four times.
The Bank of Israel expects the inflation rate predictions for the next 12 months to drop after the Central Bureau of Statistics publishes the consumer price index for September, from 2.5% to 2.1%.
According to predictions, prices are expected to rise 0.3% in the next three months on the backdrop of imminent price hikes
in the food industry.
Bank officials also said that the indicators added this month support estimates of a moderate growth of about 3%. These indicators match the predictions of the Research Department, that GDP growth will total 3.3% in 2012.
The Bank of Israel last cut interest rates in July, on the backdrop of the moderate growth rate and inflationary pressures. The coming month, however, is expected to see many price hikes, mainly in the food industry, which will send the inflation rate up.