In light of the increasing economic challenges due to the continuing military conflict with Iran and its regional repercussions, the Central Bank of Israel kept interest rates unchanged at 4.5% for the third time in a row.
The bank explained in an official statement that this decision aims to address the increasing inflationary pressures and address the widening deficit in the general budget, stressing that the state of “geopolitical uncertainty” has greatly affected economic activity and market performance.
In addition, the Central Bank reduced its forecast for the growth of the Israeli economy for the year “2026,” warning of a significant decline in the “construction” and “agriculture” sectors, in addition to a reduction in foreign investments as a result of the continuing “state of war.”
The report indicated that the high costs of the war and the noticeable increase in “Israel’s risk premium” in global markets led to a decrease in purchasing power and an increase in financial burdens on the private sector and consumers, making maintaining the stability of the “shekel” and curbing inflation among the main priorities of monetary policy.
