Fischer’s May Rate Cuts Signal Bank Joins Currency War

The Bank of Israel cut borrowing costs for a second time this month, narrowing the gap with rates in major economies as it seeks to prevent a currency appreciation from undermining growth.

Governor Stanley Fischer and his monetary committee lowered rates yesterday by another 0.25 percentage point to 1.25 percent, the lowest in more than three years. The shekel, which traded at a 21-month high in early May, lost as much as 0.9 percent against the dollar after the bank announced it wanted to “weaken the forces” for its appreciation. Today, it strengthened by 0.3 percent to trade at 3.7056 at 12:53 p.m.