The Bank of Israel has left the interest rate unchanged for the 14th consecutive time, after raising its inflation forecast for 2025 and cutting its growth forecast.
The Bank of Israel Monetary Committee, headed by Governor Prof. Amir Yaron, has announced that it has kept the interest rate unchanged at 4.5%, as expected. This is the 14th consecutive time that the Bank of Israel has left the interest rate unchanged, after cutting it from 4.75% in January 2024.
In justifying its decision the Bank of Israel said, ‘The Israeli economy continues to function in an environment of high geopolitical uncertainty in view of the intensification of the fighting in Gaza and the worsening international sentiment toward Israel. Economic activity recovered following the military operation against Iran. Annual inflation declined slightly and is in the upper portion of the target range. During the reviewed period, Israel’s risk premium remained stable at a level that is higher than it was before the Swords of Iron War.”
The Bank of Israel research department published a revised macroeconomic forecast, cutting the GDP growth forecast for 2025 from 3.3% to 2.5% but slightly raising the 2026 growth forecast from 4.6% to 4.7%. inflation for 2025 is expected to be 3%, falling to 2.2% next year, up from the previous forecast of 2.6% for 2025 and 2% for 2026. The deficit in the state budget is expected to be 5.15 of GDP in 2025, and 4.3% of GDP in 2026. The debt to GDP ratio is expected to be 71% in each of 2025 and 2026.
Published by Globes, Israel business news – en.globes.co.il – on September 29, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
Bank of Israel Governor Prof. Amir Yaron credit: Oded Karny
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