Central Bank leaves rates unchanged in April

Latest bank decision: At its meeting on 7 April 2025, the Central Bank decided to leave the interest rate unchanged at 4.50%.

Monetary policy drivers: The Central Bank likely judged it was premature to cut rates given that the labor market is tight and headline plus core inflation are above the upper bound of the Bank’s 1.0–3.0% target range. On the flipside, hiking rates was not warranted either, as market inflation expectations for the coming year were within target, and the Bank still expects inflation to decline towards the target range in the coming months—as our panelists also predict.

Policy outlook: The Central Bank provided no explicit forward guidance on the future direction of interest rates. All our panelists expect rate cuts in 2025, with most seeing 50 basis points of cuts. Monetary easing is likely to begin in Q3, as inflation is forecast to remain above-target until then.

Panelist insight: On the outlook, EIU analysts said: “As the one-off impact of tax changes recedes, global commodity prices trend lower and longer-term shekel appreciation leads to lower import prices, inflation in Israel will return more firmly to within the target range, prompting further rate cuts from the Bank of Israel. We expect a cumulative rate cut of 50 basis points in the second half of 2025.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Israeli interest rate projections for the next ten years from a panel of 10 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Israeli interest rate.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Israeli interest rate projections.

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