The Bank of Israel Monetary Committee lowered the interest rate to 4 percent, citing a moderating inflation environment with the November Consumer Price Index down 0.5 percent and annual inflation at 2.4 percent. Forecasters expect annual inflation to rise in the December CPI reading before declining to around the midpoint of the target range. Since the previous interest rate decision, the shekel strengthened 3.1 percent against the US dollar, 1.5 percent against the euro and 2.2 percent in nominal effective terms. The labour market remains tight but shows signs of easing supply restrictions, including higher participation and employment rates, lower absenteeism due to reserve duty, and slower business-sector wage growth. Indicators of activity continue to point to expansion, with credit card expenditure growing in the fourth quarter around its trend, while construction activity is high and building starts continue to increase.
Bank of Israel 2026-01-05
Bank of Israel cuts interest rate to 4 percent as inflation moderates
The Bank of Israel Monetary Committee reduced the interest rate to 4 percent, attributing the decision to a moderating inflation environment, with November's Consumer Price Index down 0.5 percent and annual inflation at 2.4 percent. The shekel has strengthened against major currencies, and while the labor market remains tight, it shows signs of easing supply restrictions.