Israel Interest Rate

The Bank of Israel held its benchmark interest rate steady at 4.5% for the twelfth consecutive meeting on July 7, 2025, in line with market expectations. This decision reflects a cautiously optimistic outlook as the economy continues to recover at a moderate pace, with GDP growing by an annualized 3.7% in the first quarter—closely matching the Bank’s forecast of 3.3% growth for 2025. Annual inflation eased to 3.1% in May, though it remains above the upper bound of the target range. The labor market remains tight, as shown by a persistently high ratio of job vacancies to unemployed persons. Since the previous rate decision, the shekel has appreciated sharply against the dollar and the euro. The Bank of Israel stated that it will continue to closely monitor inflation trends, financial market stability, and overall economic activity to guide the future course of monetary policy, amid ongoing significant geopolitical uncertainties both domestically and globally.