FX.co ★ Bank of Israel Keeps Key Rate Steady at 4.5%

On May 26, 2025, the Bank of Israel opted to maintain its benchmark interest rate at 4.5% for the eleventh consecutive session, aligning with market predictions. The central bank reaffirmed its dedication to ensuring stability within financial markets, reducing uncertainties, maintaining price stability, and fostering economic growth amidst persistent geopolitical tensions. Over the past year, inflation has climbed to 3.6%, surpassing the upper limit of the bank’s designated target range, with forecasts now suggesting a more gradual approach to returning to these target levels. Concurrently, the economy experienced an annualized growth rate of 3.4% in the first quarter of 2025, supported by strong investment, services exports, and private consumption. The Bank stressed that upcoming decisions regarding interest rates will be influenced by trends in inflation, the stability of financial markets, economic performance, and fiscal policy considerations.