Israel Interest Rate

The Bank of Israel cut its benchmark interest rate by 25 bps to 4.25% at its November meeting, marking the first reduction in nearly two years, as expected. Policymakers cited moderating inflation but emphasized caution regarding further easing. The move comes as major central banks worldwide have already begun loosening monetary policy and as last month’s US-brokered truce between Israel and Hamas holds. Annual inflation stood at 2.5% in October, within the official 1–3% target range for the third straight month. Forecasters expect a modest pickup toward year-end before inflation declines and stabilizes near the midpoint of the range. Economic activity rebounded sharply in Q3, with GDP expanding at an annualized 12.4%, though output remains below its long-term trend. The labor market also remains tight.