Bank of Israel has lowered Israel’s prime rate from .25% to 0.1%. The central bank is also putting in place a new monetary policy — i.e., three-year loans to banks at a fixed rate of .1%. The new loan is an attempt to induce banks to loosen their credit policies, and refrain from raising the cost of borrowing. Since the Corona crisis began, banks have raised interest rates on mortgages by as much as 1%, citing claims the crisis has increased their risk.
In making the announcement, Governor-General of the Bank of Israel Amir Yaron, also stated he expects the GNP of Israel to decrease by 5% in the first quarter, compared to the last quarter of 2019.
