Jerusalem, 21 October, 2026 (TPS-IL) — On Wednesday, Israel’s central bank kept its benchmark interest rate unchanged at 3.25%, opting for caution ahead of Israel’s national election and amid continuing geopolitical risks. The decision followed a series of rate reductions intended to support economic activity as inflation moderated.
Annual inflation rose to 1.6% in September, remaining within the Bank of Israel’s 1%–3% target range. The bank forecasts inflation at approximately 2% over the coming year, while economic growth is projected to reach 5.6% in 2026.
Governor Amir Yaron has emphasized that future decisions will depend on incoming economic data, including inflation, labor-market conditions and geopolitical developments. The outlook remains uncertain, with security risks and government spending potentially affecting prices and the pace of monetary easing.
A further reduction would lower borrowing costs for households and businesses, although the timing and size of any cut remain subject to the Monetary Committee’s assessment of economic conditions.
