Bank of Israel Governor Stanley Fischer reduced the interest rate by 0.25 percent to 0.75 percent on Monday - the lowest level ever seen in Israel.
This is the seventh consecutive rate reduction by the central bank since September 2008, when the rate was 4.25 percent.
The Central Bureau of Statistics earlier on Monday released data on the second half of 2008 that showed Israel's economy has been in a recession since then.
In the fourth quarter of 2008, Israel's growth domestic product decreased by 0.5 percent, after increases of 0.9 percent and 3.2 percent in the third and second quarters, respectively.
The overall growth domestic product for the second half of 2008 only increased by 1.1 percent, following a 4.8 percent increase in the first half of last year.
