Bank of Israel Reduces Benchmark Interest Rate to 3.75%
The Bank of Israel reduced its benchmark rate to 3.75% on Monday as annual inflation remained within its target range. While a strong shekel provided room for the cut, officials warned that future reductions will be gradual due to ongoing geopolitical uncertainty following the conflict with Iran.
The Bank of Israel lowered short-term interest rates to 3.75% from 4% on the afternoon of the following day. This first reduction since January follows a period of stable inflation and a 33-year high for the shekel against the USD. The move signals a shift toward easing, though geopolitical risks from the conflict with Iran limit the pace of future cuts.
### Inflation Stability Drives Policy Shift Annual inflation held at 1.9% in April, remaining within the central bank's 1% to 3% target range. Bank of Israel Deputy Governor Andrew Abir said the shekel's appreciation provided the necessary room to cut rates despite ongoing regional uncertainty. The United States and Israel launched airstrikes on Iran on February 28, and while an April 8 ceasefire holds, it remains fragile.
