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ISRAEL - May 8 - Interest Rates To Be Cut.

PM Sharon says he will intervene in the 4-month-old labour dispute which has prevented the Bank of Israel from cutting the interest rates expected at end-April. He is to hold discussions with the Governor of the Central Bank David Klein. Sharon tells foreign journalists: "Something will be done in the next couple of days when I just have one free minute". He adds he can see "no justification" in postponing a cut in the base interest rate, which was last cut at end-March from 7.5% to 7.2% (Israel's economy has been hit significantly by the intifada, which has slowed construction activity and led to a slump in tourism, as well as by the worldwide slump in high-technology sectors. The Bank of Israel's forecast for economic growth in 2001 has been downgraded to 2 to 2.5%, compared with the 4 to 4.5% expected for 2001 in official forecasts release mid-2000. The head of UBS Warburg in Israel Stephen Levey said there was "no doubt the interest rates should be cut" but warned that the main factor affecting the growth outlook, "are not going to be helped by a cut in interest rates").
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Publication:APS Diplomat Recorder
Article Type:Brief Article
Geographic Code:7ISRA
Date:May 12, 2001
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