Bank of Israel unexpectedly lowers interest rate to 4.00 percent amid cooling inflation
The Bank of Israel cut interest rates to 4.00 percent on January 5 after inflation fell to 2.4 percent. The move surprised markets and follows a 2025 ceasefire.
Insights:
The Bank of Israel cut its benchmark short-term interest rate by 25 basis points to 4.00 percent on January 5, 2026. This decision surprised financial markets in Israel 
IL, as nine of ten economists polled by Reuters had forecast that the central bank would hold rates steady this month, while only one expected a quarter-point reduction. This marks the second consecutive rate cut following a reduction in November, which was the first time the rate had been lowered in nearly two years.
IL, as nine of ten economists polled by Reuters had forecast that the central bank would hold rates steady this month, while only one expected a quarter-point reduction. This marks the second consecutive rate cut following a reduction in November, which was the first time the rate had been lowered in nearly two years.
