Stronger than expected GDP data for the last quarter of 2010-as well as a higher than expected inflation increase in January, together with rising global inflation-generated widespread expectations of a tightening in monetary policy at the Bank of Israel's meeting on February 21st. There was even some speculation that the central bank could be tempted to raise rates by more than 25 basis points-following seven quarter-point increases between August 2009 and January 2011. In the event, the central bank opted for another 25-basis-point increase. However, coming after a similar rise last month, this was the first time that there had been back-to-back increases since January 2010. The statement explaining the decision referred to the rise in both inflation and inflationary expectations, while singling out the ongoing rise in house prices and continued high rate of mortgage borrowing, as well as the strength of domestic demand. On the other hand, by noting that interest rates in the main developed economies remain very low, the Bank hinted at the risk involved in pushing Israeli rates too much out of line with those in Europe and North America-namely, that inflows of "hot money" could renew the upward pressure on the New Israeli shekel.