The Bank of Israel announced that the interest rate for November 2009 will be unchanged at 0.75 percent.

The central bank said the decision to keep the interest rate for November unchanged at 0.75 percent will help keep inflation within the target range and underpin the recovery in real activity, while supporting financial stability.

"The Bank of Israel's decision to keep the interest rate for November unchanged and to continue with an expansionary monetary policy and with its foreign exchange market policy strikes a balance between maintaining price stability, supporting the recovery of the economy and boosting employment in light of the high unemployment rate, and preserving financial stability," stated the central bank. "The Bank of Israel will continue to monitor Israeli and worldwide economic developments, and will use the instruments available to it to achieve its objectives--price stability, the encouragement of employment and growth, and support for the stability of the financial system."

The main considerations leading to the November interest rate decision:

1. Inflation measured over the previous twelve months was 2.8 percent. Inflation from the beginning of the year, however, excluding the effects of increased tax rates and surcharges and seasonally adjusted, was 1.9 percent at an annual rate, practically the middle of the target range. Inflation expectations for the next twelve months, both those of the forecasters and those derived from the capital market, remained this month at just above the midpoint of the target range. The existence of an output gap, the expectation that it will continue in 2010 despite the incipient recovery in economic activity, and the fact that the short-term effects of the government-initiated price increases will come to an end, will all act to moderate inflation over the next year.

2. The economic indicators show continued recovery in economic activity in Israel. Nevertheless, there is still uncertainty regarding the strength of the recovery in Israel, mainly because of the uncertainty about the recovery in the global economy. World trade declined in August, after increasing in the previous months; the level of activity in the US, one of Israel's main export markets, remains low; unemployment is still high in the advanced economies, and also in Israel unemployment is still above the full employment level; budget deficits and public debt in the major economies after the crisis are high, and give rise to uncertainty about the rate of recovery in those countries.

3. In addition interest rates of the leading central banks around the world are low, and are expected to remain unchanged during the coming months.