Fischer drops interest rate to 1.75%

According to the Bank of Israel the new interest is intended to help cut the cost of credit and tostrengthen the economy's ability to handle the slowdown
 
Bank of Israel Governor, Prof. Stanley Fischer, cut on Monday the interest rate by 0.75% to 1.75% - a new historic low.
 
In a press release the central bank stated: "The current reduction in the interest rate is intended to help cut the cost of credit and tostrengthen the economy's ability to handle the slowdown in economic activity and the implications of the global economic crisis”.
 
The Bank added that the decision to lower the interest rate will help strengthen the economy's ability to cope with the implications of the global economic crisis and support real activity. It is consistent with the return of inflation to the target range of 1%-3% within the next few months.
 
Lowering the interest rate is considered an economic stimulus, cutting the cost of financing for companies and household loans.
 
Economists had expected interest to be lowered by 0.5%, and some had forecasted a sharp drop of 1%.