Stanley Fischer caves in; Bank of Israel prints to weaken shekel

JERUSALEM, Feb 25, 2008 (AFP) – The Bank of Israel governor on Monday cut base interest rates by a half point, lowering them to 3.75 percent, as the shekel continued its rise against the dollar, the bank said. Governor Stanley Fischer had been under pressure from employers and the Histadrout, the Israeli trade union congress, to make the cut for several weeks to make the shekel less attractive.

The Israeli currency has been rising since the start of the year against foreign currencies, including the euro, yen and sterling, damaging exports particularly to the United States.

The governor had resisted pressure until now, saying an interest rate cut risked causing inflation. The Israeli economy experienced six percent growth last year, according to figures published by the central bureau of statistics.