Governor Stanley Fischer of the Bank of Israel surprised central figures in the financial markets by announcing on Monday that the interest rate that the bank charges commercial banks will rise a quarter of a percent in December to one percent. Fischer is the first bank head in the Western world to raise interest and the December hike is the second time he has raised the prime rate since it reached a low of half of a percent.

The hike is intended to keep inflation within the target range after the effects of tax and government-controlled price hikes have passed. The increase is also  intended to support further economic recovery, particularly in light of what the bank sees as uncertainty about its strength.

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