Israel announces biggest rate hike in 2 decades

JERUSALEM, Aug. 22 (Xinhua) -- Israel's central bank on Monday decided to raise its basic interest rate by 0.75 percentage points from 1.25 percent to 2 percent, the biggest rate hike in about two decades.

Back in July 2002, the Bank of Israel increased its rate by 2.64 percentage points from 6.46 percent to 9.1 percent.

The current interest rate of 2 percent is also the highest since December 2012 when the rate was the same figure.

People wearing face masks walk on a street amid the COVID-19 pandemic in Jerusalem, on Aug. 11, 2021. (File photo: Xinhua)

This is the fourth consecutive rate hike in Israel since April when the central bank increased the rate from its record low of 0.1 percent to 0.35 percent.

According to the central bank, the latest aggressive rate move was made to curb the annual inflation rate, which has climbed to 5.2 percent, way above its 1-3 percent target range.

The central bank also said the 6.8-percent GDP growth recorded in the second quarter, suggesting strong economic activity and tight labor market, allows the rate hike.