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Fischer ‘in a Bind’ as Investors See Rising Prices

Investors in Israel are paying the biggest premium in more than a year to protect against inflation as the stronger shekel spurs speculation central bank Governor Stanley Fischer will refrain from raising interest rates.

The spread between inflation-linked bonds due October 2014 and fixed-rate notes of similar maturity grew 20 basis points this month to 302, or 3.02 percentage points, at the 4:30 p.m. close in Tel Aviv. It reached 309 basis points on Oct. 21, the widest level since at least June 2009. Fischer, 67, is likely to leave the benchmark interest rate unchanged at 2 percent today, according to 17 of 19 economists surveyed by Bloomberg.