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Israel Bank Chief Set to Lower Interest Rates

Analysts forecast Stanley Fischer will lower February rates by 0.5% to 1.25%, the lowest in Israel's history.

The governor of the Bank of Israel, Stanley Fischer, is expected to lower interest rates once again Sunday. Analysts forecast he will lower February rates by 0.5% to 1.25%, the lowest level in Israel's history.

This will be the seventh rate reduction by Fischer since September 2008, for a total drop of 3% in five months.

In last month's discussion of interest rates, three members of the central bank management advocated a full 1% drop, but in the end Fischer sided with the other two members and lowered rates only by 0.75% for this month so as not to shock the economy too much, too quickly due to the Gaza operation.

Now that Operation Cast Lead is over, Bank of Israel sources expect Fischer to complete the move with an additional 0.5% decrease. It is possible Fischer may decide to lower rates all the way to 1%, though this seems unlikely, said a central bank source.