UPDATE 1-More rate hikes seen as Israel inflation eases to 5.2% in February

Kitco Media
By Reuters
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Reuters
(Adds details, central bank chief comments) By Steven Scheer JERUSALEM, March 15 (Reuters) - Israel's inflation rate eased to a four-month low of 5.2% in February from a 2008 high of 5.4% in January, but it was higher than expected and will likely mean another interest rate hike next month. The consumer price index (CPI) rose 0.5% in February from January, led by gains in fresh produce, housing rentals, food and transportation costs. Economists polled by Reuters had on average expected a 0.3% monthly rise and a 5.0% annual rate. February's inflation rate was the lowest since October. The Bank of Israel is slated to decide on interest rates on April 3. The central bank has raised its benchmark rate sharply over the last year to 4.25%, from 0.1% last April, amid what it calls "sticky" inflation that has kept it above a government target of 1-3%. In an interview with CNN late on Tuesday, Bank of Israel Governor Amir Yaron indicated more tightening was likely as long as inflation stayed high. "So we are determined, absolutely determined to bring inflation back down to its target," Yaron said. "And if that means continuing raising rates, and that is our primary tool, that's what we will do." He said that "it will take a little bit more pain, probably, in order to bring inflation back down to its target" and that he was not in favour of stopping monetary tightening now. "We know and there is experience in the past that if you stop too early, inflation can come back with a vengeance," Yaron said. "And therefore I predict that at least around the world, we will see rates continue to go up and they will stay up for quite a bit." Along with high inflation, Israel's economy grew 6.4% in 2022 but is forecast to grow at around 3% in 2023.
(Reporting by Steven Scheer; Editing by Alex Richardson)

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