Israel Interest Rate

Central Bank cuts rates again in September

Latest bank decision: At its meeting on 1 September, the Central Bank decided to cut its policy rate by a further 25 basis points to 3.25%, following the 25-basis-point cut in July.

Soft inflation drives move: The Bank chose to ease policy largely because inflation has moderated recently and remains below the midpoint of the Bank of Israel’s 1.0–3.0% target range, providing the space for further monetary easing.

Further easing is possible this year: The Bank did not provide explicit forward guidance. Most of our panelists currently see the Bank on hold for the rest of 2026, though a few panelists see another rate cut given the benign inflation outlook. The policy rate is forecast to stabilize around 3.0% in the longer term. The next interest-rate decision is scheduled to be published on 21 October 2026.

Panelist insight: EIU analysts—who are at the dovish end of our panel—said: “We expect further modest rate cuts later in 2026 and in 2027-28, as we forecast that inflation will remain broadly within the 1-3% target range, but we do not expect the central bank to fully unwind the cumulative 465-basis-point tightening cycle of 2022-23. We forecast a […] further reduction […] before the policy rate reaches its terminal rate, leaving it at 2.75% at the end of the 2026-30 forecast period.”

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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