Bank of Israel Holds Interest Rate Steady After Three Consecutive Cuts
Translated & summarized from Davar by baba
The Bank of Israel's Monetary Committee decided to keep the interest rate at 3.25%, halting previous cuts. Inflation is at 1.6%, and Israel's risk premium is stable despite geopolitical uncertainty. The shekel has weakened 3.1% against the dollar. Economic growth forecasts were significantly raised for 2026 and 2027.
The story in 5 lines · by baba
- Bank of Israel interest rate remains at 3.25% after three prior cuts.
- Inflation in the last 12 months is reported at 1.6%.
- Israel's risk premium is at its pre-October 7th level.
- The Israeli shekel has weakened by 3.1% against the dollar.
- Economic growth forecasts for 2026 and 2027 were substantially increased.
The Monetary Committee of the Bank of Israel has decided to maintain the benchmark interest rate at 3.25%, pausing a series of three consecutive reductions. This decision aligns with economic forecasts. In its announcement, the Bank of Israel reported that inflation over the past 12 months stands at 1.6%. While geopolitical uncertainty persists, Israel's risk premium remains at its pre-October 7th level. Since the last interest rate decision, the shekel's strengthening trend has halted, and it has depreciated by 3.1% against the US dollar.
The bank has revised its growth forecasts upwards significantly. It now projects economic growth at 5.6% for 2026 and 7.5% for 2027, a notable increase from the July forecast of 4% and 5.5% respectively. However, the Bank of Israel also provided a separate forecast for domestic product excluding offshore production, which it stated better reflects activity within the Israeli economy. According to this measure, growth is anticipated to be 3.4% in 2026 and 5.1% in 2027.
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