The Bank of Israel announced an increase in interest rates this week, drawing a negative reaction from industrialists and prompting a sharp drop on the Tel Aviv stock exchange.
Interest rates will go up by 0.3 percent Feb. 1, bringing the central bank’s lending rate to 14 percent and the prime lending rate to 15 percent.
The bank said the move was necessary to keep 1996 inflation lower than 10 percent. Industrialists, the Chamber of Commerce and the Histadrut labor federation were critical of the hike, saying that the rise would hamper the economy and worsen the balance of trade.
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