Reports by Port2Port state that the Bank of Israel has decided to maintain its benchmark interest rate at 0.5 percent, for the second consecutive month, in the interest that the economy would be able to sustain the global economic crisis. The Bank noted activities of buying foreign currency and bonds everyday are supporting the economy to tackle recession.

According to the reports inflation has lowered to an annual rate of 3.1 in April, which is helping the central bank to reduce its base rate by 3.75 percentage points. Although the base rate was expected to dip further to 1 percent the central bank is confident that it would not move further beyond 2 percent, the midpoint of an official 1-3 percent annual target in the next 12 months. The Bank of Israel is expecting some renewed growth toward the end of the year.

Meanwhile, the government is working at raising some taxes to maintain the budget deficit under control. According to the report, the government is considering to raise value added tax (VAT) by one point from 15.5 percent to 16.5 percent, which would boost inflation by almost 1 percent in the current year.