Bank of Israel keeps rate at 4.5%

• Published date: 08 April 2024
• Author: Maya Levin
• Publication title: Globes (Rishon LeZion, Israel)

In January the Bank of Israel cut the rate from 4.75% to 4.5% but in its two meetings since it has declined to lower the rate further to stimulate Israel's war-affected economy

In explaining its decision the Bank of Israel said, "Economic activity and the labor market continue to recover gradually. Alongside this, the extent of geopolitical uncertainty has increased, reflecting a relatively high risk premium for the economy."

The Bank of Israel research department sees inflation of 2.7% in 2024, up from the previous forecast of 2.5%, and inflation of 2.3% in 2025, up from 2%. The Bank of Israel sees the interest rate at 3.75% in the first quarter of 2025 - its previous forecast was 3.75%-4%.

The Bank of Israel research department has also revised its growth forecast. It said, "GDP contracted by 5.6% in the fourth quarter of 2023, compared with...