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Israel's central bank maintains benchmark interest rate

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Israel's central bank maintains benchmark interest rate

The Bank of Israel left its key interest rate unchanged at 0.1% and said it would keep the rate low for as long as needed as inflation is still below the target despite a continued increase.

Inflation in the 12 months ending in April was 0.4%, and inflation measured by indices that exclude transitory effects was higher, though still below the target, according to a statement from the central bank.

"The inflation environment continues to rise, supported by the accommodative monetary policy, but remains below the target," said the bank, which also noted an increase in inflation expectations following the previous interest rate decision.

"The Monetary Committee intends to maintain the accommodative policy as long as necessary in order to entrench the inflation environment within the target range," the bank also said.

Israel's economy expanded at a "solid pace and in a balanced manner" in the first quarter, the bank said, with a seasonally adjusted annual GDP growth rate of 4.2%.

The labor market remained tight, with the unemployment rate at 3.2%, according to the central bank.

"After some slowing, business sector wages resumed rising, at a more rapid rate," the bank also said.