The Bank of Israel on Sunday raised its benchmark interest rate by 25 basis points to 1.50%, taking most analysts by surprise who had predicted no change.
This is the fourth time since August last year the benchmark interest rate has been raised.
"The current increase is made against the background of growth that continues to become more firmly based, inflation expectations that are close to the upper limit of the target inflation range, and the rise in asset prices," the bank said in a statement.
"However, monetary policy continues to be expansionary even after this increase."
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