Bank of Israel keeps rates steady at 4.5%

Credit: REUTERS/RONEN ZVULUN

Corrects throughout to say kept rates steady (not cut

JERUSALEM, Feb 26 (Reuters) - The Bank of Israel kept interest rates steady on Monday after cutting by a quarter-point in January, taking a cautious approach even as the economy weakens as a result of Israel's war against Palestinian militant group Hamas.

Analysts polled by Reuters were split ahead of the decision, with seven expecting no move and seven projecting another 25 basis point reduction.

The central bank kept it benchmark rate ILINR=ECI at 4.5%.

Prior to January's cut, it had raised rates 10 straight times in an aggressive tightening cycle from a all-time low of 0.1% in April 2022, before pausing last July.

Israel's inflation rate eased to 2.6% in January, within the annual target range of 1%-3%.

The economy contracted by an annual 19.4% in the fourth quarter, reflecting the toll of the country's war with Hamas, to end 2023 with growth of 2%.

(Reporting by Steven Scheer; editing by Christina Fincher)

((steven.scheer@thomsonreuters.com; +972 2 632 2210; Reuters Messaging: Twitter: @StevenMScheer))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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