A Third Israeli Interest Rate Cut
January 5, 2026
At the Bank of Israel’s first scheduled review of interest rate policy this year. In light of a 25-basis point cut at the prior review in late November, analysts were not anticipating an interest rate change, but it was instead cut by a further 25 basis points to 4.0%, its lowest level since February 2023. The interest rate had been steady at 4.5% from January 2024 until cut this past November, and its crested at 4.75% from May 2023 until January 2024. A 2.4% year-on-year consumer price inflation rate in November was inside the central bank’s target range of 1-3%, its lowest reading since November 2021, and down from 3.8% a year ago and a cyclical high of 5.4% in January 2023. A rise of over 14% in the Israeli shekel against the dollar during 2025 contributed to the disinflationary trend and was an additional incentive for central bank officials to cut their interest rate again at this month’s review.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Israel
ShareThis
