Israel inflation rate reaches two-year low of 3.0%, returns to target

JERUSALEM (Reuters) - Israel's inflation rate edged down more than expected to 3.0% in December from 3.3% in November, the Central Bureau of Statistics said on Monday - its lowest level in two years which could support further central bank interest rate cuts.

A Reuters poll had expected the rate to ease to 3.1% last month. The consumer price index fell 0.1% in December from November.

Israel's war against Hamas militants is weighing on economic growth and helping to bring down inflation back down, with the rate now within an official rate of 1-3% for the first time since December 2021.

The Bank of Israel earlier this month lowered its benchmark interest rate by 25 basis points to 4.5%, its first cut in four years. But it cautioned that looser fiscal policy due to higher defence spending could slow the pace of future reductions.

(Reporting by Steven Scheer; Editing by Andrew Heavens)