Bank of Israel cuts benchmark interest rate to 3.75%
The Bank of Israel lowered short-term interest rates by 25 basis points on Monday citing a strong shekel and stable inflation within its target range. While the central bank resumes its easing cycle, policymakers cautioned that geopolitical uncertainty remains a significant risk factor for the economy.
The Bank of Israel lowered short-term interest rates by 25 basis points to 3.75% on the afternoon of May 25. This third cut in six months follows a pause in policy easing during the previous two meetings. The aim of lower borrowing costs is to support economic recovery while the shekel trades at a 33-year high against the USD.
### Inflation Stability Meets Geopolitical Risk The annual inflation rate held at 1.9% in April, remaining within the Bank of Israel's 1-3% target range. Policymakers cited a strong shekel as a moderating factor for price pressures, despite concerns over state spending and energy costs. The United States and Israel previously launched airstrikes on Iran on February 28, though a ceasefire reached on April 8 remains in place.
