On 23 February 2026 the Bank of Israel Monetary Committee kept the policy rate at 4.00 %, arguing that annual inflation has eased to 1.8 %—around the midpoint of the 1–3 % target range—while output and employment remain robust but geopolitical risks linked to a potential confrontation with Iran have risen. The decision follows a cumulative 50 bp rate reduction since November 2025. Fourth-quarter 2025 GDP grew by an annualised 4 %, above trend, and the labour market stayed tight with a high vacancies-to-unemployed ratio as supply constraints persisted; rents in new and renewed contracts accelerated to 3.8 % and home prices have started to rise again. Since the previous meeting the shekel has appreciated 1.1 % against the USD and 0.4 % versus the euro, while Israel’s CDS and hard-currency sovereign spreads widened slightly. Globally, economic activity and trade continue to expand and inflation is moderating, though Brent crude prices have risen roughly 16 % amid US–Iran tensions, and major central banks have held rates steady. The Committee reaffirmed that the policy path will hinge on inflation dynamics, economic performance, geopolitical developments and fiscal conditions.
Bank of Israel 2026-02-23
Bank of Israel holds policy rate at 4.00%
Bank of Israel’s Monetary Committee on 23 February 2026 kept the policy rate at 4.00 %, pausing after 50 bp of cuts since November, as inflation eased to 1.8 %—mid-range of its 1–3 % target—while growth and employment remained strong but Iran-related geopolitical risks intensified. The committee said future policy will hinge on inflation, economic conditions, geopolitical developments and fiscal factors.