FX.co ★ Bank of Israel Resumes Easing Cycle as Expected

The Bank of Israel lowered its benchmark interest rate by 25 basis points to 3.75% at its May 2026 meeting, as widely expected, following two consecutive meetings in January and February in which the rate was left unchanged. The move reflected the strength of the shekel, contained inflation, and the potential for an agreement to end the war with Iran, even as geopolitical uncertainty remains elevated. The central bank emphasized that “inflation in Israel remains around the midpoint of the target.” Annual inflation held steady at 1.9% in April, comfortably within the government’s 1%–3% target range.