Israel’s financial markets are making efforts to resist the economic crisis, as the Bank of Israel (BOI) recently cut its interest rates by 0.5 percentage points, this week. The result is expected to increase the liquidity in the domestic financial markets and to strengthen the economy to further face the global crisis. With the reduction, the BOI’s prime lending rate stands at 3.75 percent.

Following this reduction, the Tel Aviv Stock Exchange (TA-100 index) rose 4.62 percent on Tuesday, while a day before it was at a loss of 3.15 percent. When compared to a year ago, the Index is down 37 percent as compared to 716.40, a year ago.

Within the backdrop of the economic crisis worldwide, the Israel domestic market faces the challenge of a slowdown in economic growth, which the rate reduction is trying to buffer. The Israeli diamond industry has favoured the move of BOI The industry apparently was working its way at building trade ties in Asia and India, as a way to counteract the slump in the US. The domestic diamond industry is hopeful of the economic situation bettering within a few months.

The BOI has stated that inflation in the country is likely to ease in the coming months, with the fall in world commodity prices and expected slowdown in economic growth. The bank's 12-month forecast moved back to within the target range of 1 percent to 3 percent, as reported in media.