Israel Interest Rate

The Bank of Israel held its benchmark interest rate steady at 4.5% for the eleventh consecutive meeting on May 26, 2025, in line with market expectations. The central bank reiterated its commitment to stabilizing financial markets, reducing uncertainty, maintaining price stability, and supporting economic activity amid ongoing geopolitical tensions. Inflation rose to 3.6% over the past 12 months, exceeding the upper bound of the bank’s target range. Forecasts now indicate a slower return to target levels than previously expected. Meanwhile, the economy grew at an annualized rate of 3.4% in Q1 2025, driven by robust investment, services exports, and private consumption. The Bank emphasized that future interest rate decisions will be guided by trends in inflation, financial market stability, economic activity, and fiscal policy.