Monetary policy in Israel affects inflation rates. By analyzing data from 1989 to 1997, researchers found that changes in monetary policy variables, like the rate of change of M1 and the real interest rate, impact inflation with a delay of about two quarters. A simple equation can predict recent inflation movements fairly well. Various factors, including fiscal, monetary, labor market, and external variables, contributed to reducing inflation from 16-18% to 10% per year after 1991-92.