Bank of Israel Cuts Interest Rate for Third Consecutive Time

The Bank of Israel announced on Tuesday its decision to lower the benchmark interest rate by 0.25%, bringing it to 3.25%. This marks the third consecutive rate cut by the central bank. The next monetary policy decision is scheduled for Wednesday, October 21st.

Finance Minister Bezalel Smotrich, who has previously criticized the pace of rate reductions, reiterated his view that the cuts are too slow. "As I have said all along, lowering the interest rate is a necessary step, and I congratulate the governor for moving in the right direction. It would have been good if the interest rate had been lowered by a larger amount," Smotrich stated. He added that interest rates should continue to fall to reduce loan costs for citizens and businesses, encourage investment, and alleviate the cost of living. Smotrich attributed the economy's resilience and responsible management in recent years to the ability to lower rates and provide relief.

Yechiel Perush, CEO and co-owner of the real estate company Meidar, also commented on the decision. He noted that strong demand for apartments persists but is hindered by high interest rates, leading to reduced purchasing. Perush pointed to a disproportionate rise in rental prices as evidence, explaining that inability to buy forces more people into renting, which the market exploits. He welcomed the rate cut as a positive step that will create more opportunities for potential homebuyers, but also advocated for more aggressive reductions.