The Bank of Israel’s Monetary Committee held its interest rate at 3.25%, with inflation below the target-range midpoint and economic activity continuing to grow amid high geopolitical uncertainty, following reductions from 4.25% in November 2025, including a 25-basis-point cut in September 2026. Annual inflation stood at 1.6% in September, and forecasters expect it to converge toward the target-range midpoint at the beginning of 2027. The Research Department projected gross domestic product growth of 5.6% in 2026, with much of the forecast revision reflecting production abroad by Israeli firms. Excluding that production, which better reflects domestic activity, growth was projected at 3.4%. Business credit continued to expand rapidly. The shekel depreciated by 3.1% against the US dollar since the previous interest rate decision. Globally, higher energy prices and supply-chain disruptions increased inflationary pressures. The committee said the interest rate path would depend on inflation, economic activity, geopolitical uncertainty and fiscal developments, while policy remained focused on price stability, supporting economic activity and market stability.
Bank of Israel Holds Policy Rate at 3.25%
The Bank of Israel’s Monetary Committee held its interest rate at 3.25%, with annual inflation at 1.6% in September and economic activity growing amid high geopolitical uncertainty. The committee said the rate path would depend on inflation, economic activity, geopolitical uncertainty and fiscal developments.