JERUSALEM—The Bank of Israel raised its benchmark interest rate on Monday by three-quarters of a percentage point, its biggest hike in two decades, and appeared on track for further increases as it tries to rein in inflation that has topped 5 percent.
The central bank lifted its key rate to 2.0 percent from 1.25 percent, continuing a tightening cycle that began in April when policymakers first raised the rate from 0.1 percent, an all-time low set at the outset of the COVID-19 pandemic.
The likelihood of a 75-basis-point hike increased last week when data showed Israel’s economy grew a robust 6.8 percent in the second quarter, while the annual inflation rate jumped to 5.2 percent in July, its highest level since October 2008….