JERUSALEM, Feb 23 (Reuters) - The Bank of Israel lowered its benchmark interest rate to 0.1 percent from 0.25 percent, its first reduction in six months amid persisting deflation and a strengthening shekel.
The move came as a surprise, in which 11 of 12 economists had expected the central bank to stand pat.
But the shekel has gained more than 3 percent the last few weeks and Israel’s inflation rate was -0.5 percent in January, with expectations of staying below 1 percent in the next year.
The central bank has largely blamed low oil and other commodity prices for the benign inflation environment.
At the same time, economic growth surged in the final three months of 2014 but taken together with the third quarter - hit hard by a Gaza war - growth in the second half the year was identical to the first six months.
For all of 2014 the economy grew 2.9 percent, with estimates for at least a 3.2 percent pace in 2015. (Reporting by Steven Scheer)