Bank of Israel Cuts Interest Rate for Third Consecutive Time

The Bank of Israel has lowered its benchmark interest rate by 0.25%, bringing it to 3.25%, the lowest level since November 2022. This marks the fourth rate cut this year and the first time three consecutive reductions have occurred since the 2008 financial crisis. The decision, anticipated by approximately half of market analysts, is attributed to low inflation figures of 1.5% and expectations of 1.4%, coupled with sluggish domestic economic growth of around 1% in the first half of 2026.

Finance Minister Bezalel Smotrich welcomed the move, stating, "A rate cut is a necessary step, and I congratulate the governor on a step in the right direction. It would have been good if the rate had been lowered by a larger amount." He emphasized that interest rates should continue to fall to alleviate the cost of living, ease burdens on citizen loans, and support business owners.

Smotrich further commented that "the responsible management of the economy in recent years and the resilience of the Israeli economy allow interest rates to fall and provide relief to households and the public."