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 Israel's central bank has announced an increase of 0.5 per cent in the base interest rate to 3.75 per cent, reaching the highest level since October 2008.

This is the seventh consecutive rise in the base interest rate in Israel since April 2022 when the figure then stood at 0.1 per cent, reports Xinhua news agency.

The decision aims to curb the continuous rise of inflation, which reached 5.3 per cent in November, the highest 12-month figure in over 14 years.

"High inflation involves growing uncertainty and increasing difficulty in making decisions at the household and the business levels," Bank of Israel Governor Amir Yaronor said.

He added that "it weighs on economic conduct, and adversely impacts growth and welfare, first and foremost amongst the weaker strata."

The bank explained that the interest rate increase was made possible due to strong activity in the Israeli economy, accompanied by a tight labour market.