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Bank of Israel holds rates as Iran war likely to spark inflation

BY Reuters | ECONOMIC | 09:04 AM EDT

JERUSALEM, March 30 (Reuters) - The Bank of Israel left short-term interest rates unchanged for a second straight month on Monday as expected, amid fears of a rise in inflation stemming from the conflict with Iran that has driven up oil prices.

After cuts in November and January following a ceasefire in Gaza, the central bank held steady last month to leave its benchmark rate at 4%.

Israel's annual inflation rate moved higher in February to 2.0% from a 4-1/2-year low of 1.8% in January, staying well within an official target range of 1-3%.

All 13 economists polled by Reuters had projected no move, citing the U.S. and Israeli strikes launched on February 28 that has resulted in Iran largely shutting the Strait of Hormuz, sending oil prices soaring. (Reporting by Steven Scheer; Editing by Andrew Cawthorne)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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