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The governor of the Bank of Israel, Stanley Fischer, yesterday announced - as expected - that he would leave Israeli interest rates unchanged for February at 4.25%.

The central bank's official announcement stated: "The decision to leave the interest rate unchanged is intended to bring inflation, measured over the previous 12 months, to within the target range by the middle of 2008 [1-3%] - even if it is expected to be above the target in the first half of the year - and to bring it close to the midpoint of the range by the end of the year."

The bank said it expects the dollar's weakness against the shekel to moderate price increases in coming months, though less than in the past. Israeli economic growth may also be slightly less than last year, 5.3%, due to a possible world economic slowdown.

The bank's announcement added the move "is also intended to continue to support financial stability, particularly at the present time - this, as part of the infrastructure essential for sustained economic growth. The decision takes into account both the inflationary forces acting at present in the economy, and the influence, current and expected, of forces operating in the opposite direction."

Ohad Marani of the Manufacturers Association said there was justification to lower Israeli rates by at least 0.25%, due to increasing fears of a possible slowdown in the Israeli economy.

Uriel Lynn, the president of the Chambers of Commerce, praised the bank's decision due to the shekel's strength against major currencies and the world economic environment.