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Israel Lowers Rate To 0.5% Needs To Stimulate

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Israel’s central bank may follow peers from the U.S. to Europe in looking beyond interest rates for ways to boost the economy, after Governor Karnit Flug unexpectedly cut the benchmark to a record amid the war in Gaza.

The Bank of Israel trimmed the policy rate to 0.5 percent yesterday, matching the low it reached during the slump of 2009. The bank said it’s “too early” to determine the economic impact of the three-week conflict in the Gaza Strip. The unrest threatens Israel’s tourism industry, adding to strains on an economy where consumer spending is on the wane and the strong shekel is squeezing exporters, who are urging Flug to weaken it.

The global economic slowdown of the past six years pushed the Federal Reserve and other central banks into alternative stimulus policies as their benchmark rates neared zero. Flug has matched her predecessor Stanley Fischer’s appetite for surprising the markets since she took over last year, and economists said her next move may be to deploy new tools.

Seems everyone needs to boost their economy. Clearly more intervention needed!

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