The slowdown in Israel's economy permits an easing of the monetary restraint without hurting efforts to tame inflation, the central bank said.

Most economists and even most politicians, it would seem, would prefer to err on the side of monetary restraint.

The report added to fears that further monetary restraint might be needed to curb American demand for imported goods.

The other side of the government's economic policy, monetary restraint and unemployment, made its public spending goal difficult to achieve, so the goal was modified.

The report added to fears that further monetary restraint by the Federal Reserve might be needed to slow the economy.

As head of the bank, Mishima encouraged policies of monetary restraint.

"I don't see monetary policy changing so much to amount to a total reversal of the monetary restraint we have had."

The increase in the deficit to $12.5 billion added to fears that further monetary restraint may be needed.

A major factor in each, most analysts say, is the Federal Reserve's monetary restraint in recent years.

Indeed, it is possible that price pressures are building under the surface so that they will eventually break loose of the Fed's monetary restraint.