Bank of Israel quashes rate cut rumors

The Bank of Israel today issued a special announcement in which it stressed that there will be no new interest rate decision before the next planned Monetary Committee meeting on the matter on November 24. This follows a wave of rumors that there would be an unscheduled announcement on the matter. The interest rate has been 4.5% since it was cut from 4.75% in January 2024.

The Tel Aviv Stock Exchange (TASE) opened the first day of trading today after the holidays since the return of all the hostages held by Hamas. The main indices opened higher as did government bonds. The price of 10-year Israeli government bonds due has jumped by about 1.8% since the start of the month and is trading at a low yield to maturity that is significantly lower than the symbolic 4% line (3.89%). This is a low yield to maturity that reflects a decrease in risk and an expectation of a rate cut.

BoI keeps rate at 4.5%, cuts growth forecast

The Bank of Israel said, “Due to the rumors on the subject, we would like to clarify that the upcoming interest rate decision is scheduled for 24.11.25. Although the Bank of Israel reserves the right to make interest rate decisions even outside of the regular dates, moving the decision forward is not on the agenda.”

Over 15 years ago, the late Governor Prof. Stanley Fischer carried out sharp, unscheduled interest rate cuts in the wake of the 2008 financial crisis.

Relatively sharp rate cuts expected

The Bank of Israel’s unusual announcement comes after growing market expectations that the Governor will be required to reduce interest rates in his upcoming decision, or perhaps even earlier. This is despite the fact that after the last interest rate decision he stated that it would be necessary to examine inflation data in order to make the interest rate decision. Yet hopes for a swift cut have apparently come due to the agreement to return the hostages and end the war, after US President Donald Trump’s visit to Israel on Monday.

To what extent investors believe that interest rates in the economy are on the way to a relatively sharp fall can also be learned from the interest rate that can be received on short-term securities (MAKAM), discounted bonds issued by the Bank of Israel with a maturity of up to one year. MAKAMs currently offer those who “lock” their money in for a year a yield to maturity of 4%, compared to a yield of over 4.2% in August.

Published by Globes, Israel business news – en.globes.co.il – on October 15, 2025.

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