Bank of Israel Governor Professor Stanley Fischer said Monday that he plans to cut the interest rate to 0.75 percent next month. The poor market performance in late 2008 made the step necessary, he said.
Fischer has cut a total of 3.5 percent off the interest rate in the past year and has expressed willingness to cut the rate to zero if he believes it will help the market.
The decision was met with criticism from two senior members of the Federation of Israeli Chambers of Commerce. President Uriel Lin said interest cuts are “no longer effective” and warned that it could hurt those who keep their savings in bank accounts.
Chambers of Commerce financial committee head Ori Yehudai expressed similar criticism, saying interest cuts had “run their course” as an effective means of dealing with the slow market.
The Bank of Israel has also been buying United States dollars in a bid to stabilize the dollar-shekel rate, and is buying long-term government bonds.