Bank of Israel keeps interest rate unchanged in July

Outgoing Governor of the Bank of Israel, Stanley Fischer, and his monetary committee decided to leave the key interest rate for July unchanged at 1.25 percent, the bank said Monday. This is the last monetary decision of Fischer who has announced in January that he would step down in June. The Israeli central bank reduced the interest rate twice in May. Explaining the decision, the bank cited mainly an expected slight increase in inflation and a possible slowdown in the growth rate of economic activity in recent months. Fischer had led a low-rate policy although the public accused him of failing to tackle rising housing prices. When he assumed the post in 2005, the interest rate was 3.5 percent. On Sunday, Israeli Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid announced their decision to appoint Jacob Frenkel as the next central bank chief. Frenkel, who served as the Bank of Israel's governor between 1991 and 2000, is considered to be close to Netanyahu. Economists expect he would continue a line similar to Fischer's.